Is Baxter International Inc. (NYSE:BAX) a buy?
In the 21st century investor’s toolkit, there are many indicators shareholders can use to track their holdings. A duo of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a solid margin (see just how much).
Just as crucial, optimistic insider trading sentiment is a second way to look at the investments you're interested in. Just as you'd expect, there are lots of reasons for an insider to sell shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this strategy if shareholders know where to look (learn more here).
Now that that's out of the way, let's analyze the newest info about Baxter International Inc. (NYSE:BAX).
Heading into Q3, a total of 40 of the hedge funds we track held long positions in this stock, a change of 14% from one quarter earlier. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their holdings meaningfully.
According to our 13F database, First Eagle Investment Management, managed by Matt McLennan, holds the most valuable position in Baxter International Inc. (NYSE:BAX). First Eagle Investment Management has a $140 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is David Cohen and Harold Levy of Iridian Asset Management, with a $129.6 million position; 1.6% of its 13F portfolio is allocated to the stock. Remaining hedgies that are bullish include Ric Dillon's Diamond Hill Capital, Jim Simons's Renaissance Technologies and Phill Gross and Robert Atchinson's Adage Capital Management.
With a general bullishness amongst the titans, certain money managers were leading the bulls' herd. First Eagle Investment Management, managed by Matt McLennan, assembled the most outsized position in Baxter International Inc. (NYSE:BAX). First Eagle Investment Management had 140 million invested in the company at the end of the quarter. David Cohen and Harold Levy's Iridian Asset Management also initiated a $129.6 million position during the quarter. The other funds with new positions in the stock are Ric Dillon's Diamond Hill Capital, Jim Simons's Renaissance Technologies, and Phill Gross and Robert Atchinson's Adage Capital Management.
Bullish insider trading is best served when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time period, Baxter International Inc. (NYSE:BAX) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).
We'll go over the relationship between both of these indicators in other stocks similar to Baxter International Inc. (NYSE:BAX). These stocks are DENTSPLY International Inc. (NASDAQ:XRAY), CareFusion Corporation (NYSE:CFN), C.R. Bard, Inc. (NYSE:BCR), Becton, Dickinson and Co. (NYSE:BDX), and Covidien plc (NYSE:COV). This group of stocks are the members of the medical instruments & supplies industry and their market caps match BAX's market cap.