Do Hedge Funds and Insiders Love Johnson & Johnson (NYSE:JNJ)?

Johnson & Johnson (NYSE:JNJ) was in 67 hedge funds’ portfolio at the end of the fourth quarter of 2012. JNJ has experienced a decrease in hedge fund interest in recent months. There were 79 hedge funds in our database with JNJ positions at the end of the previous quarter.

To the average investor, there are many metrics market participants can use to track their holdings. A pair of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top investment managers can outclass the S&P 500 by a significant amount (see just how much).

Equally as beneficial, positive insider trading activity is another way to break down the stock market universe. There are many incentives for a bullish insider to get rid of shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).

Consequently, it’s important to take a glance at the latest action surrounding Johnson & Johnson (NYSE:JNJ).

Johnson & Johnson (NYSE:JNJ)

What does the smart money think about Johnson & Johnson (NYSE:JNJ)?

At the end of the fourth quarter, a total of 67 of the hedge funds we track were long in this stock, a change of -15% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.

According to our comprehensive database, Ken Fisher’s Fisher Asset Management had the most valuable position in Johnson & Johnson (NYSE:JNJ), worth close to $729 million billion, accounting for 2% of its total 13F portfolio. The second largest stake is held by Yacktman Asset Management, managed by Donald Yacktman, which held a $589 million position; 2.4% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Prem Watsa’s Fairfax Financial Holdings, Kerr Neilson’s Platinum Asset Management and George Soros’s Soros Fund Management.

Since Johnson & Johnson (NYSE:JNJ) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that elected to cut their positions entirely at the end of the year. Interestingly, Sean Cullinan’s Point State Capital cut the biggest stake of the “upper crust” of funds we watch, comprising an estimated $158 million in call options, and Robert Rodriguez and Steven Romick of First Pacific Advisors LLC was right behind this move, as the fund cut about $134 million worth. These transactions are important to note, as total hedge fund interest fell by 12 funds at the end of the year.

What have insiders been doing with Johnson & Johnson (NYSE:JNJ)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, Johnson & Johnson (NYSE:JNJ) has experienced zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

With the returns exhibited by Insider Monkey’s time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Johnson & Johnson (NYSE:JNJ) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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