Johnson & Johnson (NYSE:JNJ) is a stalwart, and its massive market cap in excess of $250B allows hedge funds to more or less "park" their assets in a relatively safe company with decent yields.
In the financial world, there are plenty of methods market participants can use to watch their holdings. A pair of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a healthy amount (see just how much).
Equally as useful, positive insider trading sentiment is a second way to analyze the investments you're interested in. As the old adage goes: there are many reasons for an executive to drop shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the useful potential of this strategy if investors understand where to look (learn more here).
Keeping this in mind, let's analyze the latest info surrounding Johnson & Johnson (NYSE:JNJ).
In preparation for the third quarter, a total of 64 of the hedge funds we track were long in this stock, a change of -2% from the first quarter. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their holdings substantially.
Out of the hedge funds we follow, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Johnson & Johnson (NYSE:JNJ). Fisher Asset Management has a $872.5 million position in the stock, comprising 2.3% of its 13F portfolio. Coming in second is Donald Yacktman of Yacktman Asset Management, with a $838 million position; the fund has 4% of its 13F portfolio invested in the stock. Remaining hedgies that hold long positions include Prem Watsa's Fairfax Financial Holdings, D. E. Shaw's D E Shaw and Kerr Neilson's Platinum Asset Management.
As Johnson & Johnson (NYSE:JNJ) has experienced dropping sentiment from the smart money's best and brightest, it's easy to see that there were a few hedge funds that slashed their full holdings in Q1. Intriguingly, Bill Miller's Legg Mason Capital Management cut the biggest investment of the 450+ funds we watch, valued at close to $111.6 million in stock, and John Overdeck and David Siegel of Two Sigma Advisors was right behind this move, as the fund dumped about $35.3 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in Q1.
Insider buying is particularly usable when the company we're looking at has experienced transactions within the past six months. Over the latest six-month time frame, Johnson & Johnson (NYSE:JNJ) has seen zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to Johnson & Johnson (NYSE:JNJ). These stocks are GlaxoSmithKline plc (ADR) (NYSE:GSK), Merck & Co., Inc. (NYSE:MRK), Sanofi SA (ADR) (NYSE:SNY), Novartis AG (ADR) (NYSE:NVS), and Pfizer Inc. (NYSE:PFE). This group of stocks are in the drug manufacturers - major industry and their market caps are similar to JNJ's market cap.