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Should You Avoid Edwards Lifesciences Corp (NYSE:EW)? – Zimmer Holdings, Inc. (NYSE:ZMH), Boston Scientific Corporation (NYSE:BSX)

Edwards Lifesciences Corp (NYSE:EW) investors should be aware of a decrease in support from the world’s most elite money managers recently.

Edwards Lifesciences Corp (NYSE:EW)

In the eyes of most shareholders, hedge funds are assumed to be worthless, old investment tools of yesteryear. While there are more than 8000 funds trading at present, we hone in on the leaders of this club, around 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total asset base, and by paying attention to their top picks, we have brought to light a few investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

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With all of this in mind, it’s important to take a glance at the recent action surrounding Edwards Lifesciences Corp (NYSE:EW).

Hedge fund activity in Edwards Lifesciences Corp (NYSE:EW)

At year’s end, a total of 14 of the hedge funds we track held long positions in this stock, a change of -26% from the third quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly.

According to our comprehensive database, Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, holds the most valuable position in Edwards Lifesciences Corp (NYSE:EW). Sectoral Asset Management has a $125 million position in the stock, comprising 4.4% of its 13F portfolio. Coming in second is Columbus Circle Investors, managed by Donald Chiboucis, which held a $17 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Steven Cohen’s SAC Capital Advisors, Richard Driehaus’s Driehaus Capital and Jim Simons’s Renaissance Technologies.

Seeing as Edwards Lifesciences Corp (NYSE:EW) has experienced a declination in interest from hedge fund managers, we can see that there exists a select few hedgies that elected to cut their entire stakes at the end of the year. It’s worth mentioning that Paul Tudor Jones’s Tudor Investment Corp cut the biggest position of the “upper crust” of funds we track, totaling an estimated $8 million in stock.. Charles Anderson’s fund, Fox Point Capital Management, also dumped its stock, about $8 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 5 funds at the end of the year.

Insider trading activity in Edwards Lifesciences Corp (NYSE:EW)

Insider buying is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time period, Edwards Lifesciences Corp (NYSE:EW) has seen zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Edwards Lifesciences Corp (NYSE:EW). These stocks are Zimmer Holdings, Inc. (NYSE:ZMH), St. Jude Medical, Inc. (NYSE:STJ), Varian Medical Systems, Inc. (NYSE:VAR), Boston Scientific Corporation (NYSE:BSX), and Smith & Nephew plc (ADR) (NYSE:SNN). This group of stocks are the members of the medical appliances & equipment industry and their market caps are closest to EW’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Zimmer Holdings, Inc. (NYSE:ZMH) 30 0 7
St. Jude Medical, Inc. (NYSE:STJ) 27 1 9
Varian Medical Systems, Inc. (NYSE:VAR) 16 0 13
Boston Scientific Corporation (NYSE:BSX) 40 1 0
Smith & Nephew plc (ADR) (NYSE:SNN) 7 0 0

With the results demonstrated by Insider Monkey’s time-tested strategies, everyday investors should always watch hedge fund and insider trading activity, and Edwards Lifesciences Corp (NYSE:EW) is no exception.

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

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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