Is Hill-Rom Holdings, Inc. (NYSE:HRC) a good investment?
If you were to ask many traders, hedge funds are perceived as overrated, outdated financial vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds trading today, this site focuses on the upper echelon of this club, about 525 funds. Analysts calculate that this group has its hands on the majority of the smart money's total capital, and by paying attention to their best investments, we've come up with a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as useful, bullish insider trading activity is a second way to look at the marketplace. As the old adage goes: there are a variety of reasons for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if "monkeys" understand what to do (learn more here).
Now that that's out of the way, let's examine the recent info about Hill-Rom Holdings, Inc. (NYSE:HRC).
Heading into Q3, a total of 14 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes substantially.
Out of the hedge funds we follow, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Hill-Rom Holdings, Inc. (NYSE:HRC). Fisher Asset Management has a $62.3 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Royce & Associates, managed by Chuck Royce, which held a $39.9 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Cliff Asness's AQR Capital Management, David Dreman's Dreman Value Management and D. E. Shaw's D E Shaw.
Due to the fact Hill-Rom Holdings, Inc. (NYSE:HRC) has experienced dropping sentiment from the smart money's best and brightest, we can see that there exists a select few funds who sold off their positions entirely at the end of the second quarter. Interestingly, Jim Simons's Renaissance Technologies dropped the largest investment of the 450+ funds we key on, totaling about $6.5 million in stock. Neil Chriss's fund, Hutchin Hill Capital, also dropped its stock, about $2.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Legal insider trading, particularly when it's bullish, is particularly usable when the company in focus has experienced transactions within the past 180 days. Over the last six-month time period, Hill-Rom Holdings, Inc. (NYSE:HRC) has experienced zero unique insiders buying, and zero 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 Hill-Rom Holdings, Inc. (NYSE:HRC). These stocks are Insulet Corporation (NASDAQ:PODD), HeartWare International Inc (NASDAQ:HTWR), West Pharmaceutical Services Inc. (NYSE:WST), Thoratec Corporation (NASDAQ:THOR), and Haemonetics Corporation (NYSE:HAE). This group of stocks belong to the medical instruments & supplies industry and their market caps are closest to HRC's market cap.