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Zimmer Holdings, Inc. (ZMH): Hedge Fund and Insider Sentiment Unchanged, What Should You Do?

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To many of your peers, hedge funds are viewed as delayed, old investment tools of a forgotten age. Although there are more than 8,000 hedge funds in operation in present day, Insider Monkey looks at the masters of this club, around 525 funds. Analysts calculate that this group oversees most of the hedge fund industry’s total capital, and by watching their highest performing equity investments, we’ve spotted a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 beaten the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as necessary, positive insider trading sentiment is a second way to analyze the stock market universe. Just as you’d expect, there are lots of motivations for an insider to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various academic studies have demonstrated the market-beating potential of this tactic if you know what to do (learn more here).

Now that that’s out of the way, we’re going to examine the recent info for Zimmer Holdings, Inc. (NYSE:ZMH).

How have hedgies been trading Zimmer Holdings, Inc. (NYSE:ZMH)?

At the end of the second quarter, a total of 31 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully.

Zimmer Holdings, Inc. (NYSE:ZMH)Out of the hedge funds we follow, Ariel Investments, managed by John W. Rogers, holds the biggest position in Zimmer Holdings, Inc. (NYSE:ZMH). Ariel Investments has a $66 million position in the stock, comprising 1.1% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $48 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Jim Simons’s Renaissance Technologies, David Harding’s Winton Capital Management and Jacob Gottlieb’s Visium Asset Management.

Since Zimmer Holdings, Inc. (NYSE:ZMH) has faced declining interest from the entirety of the hedge funds we track, we can see that there exists a select few fund managers who sold off their positions entirely heading into Q2. Interestingly, Daniel Bubis’s Tetrem Capital Management dropped the biggest investment of the 450+ funds we watch, worth close to $13 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also dumped its stock, about $11.3 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Zimmer Holdings, Inc. (NYSE:ZMH)

Insider buying is particularly usable when the company in question has seen transactions within the past half-year. Over the latest half-year time period, Zimmer Holdings, Inc. (NYSE:ZMH) has experienced zero unique insiders buying, and 7 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 Zimmer Holdings, Inc. (NYSE:ZMH). These stocks are Intuitive Surgical, Inc. (NASDAQ:ISRG), Edwards Lifesciences Corp (NYSE:EW), Smith & Nephew plc (ADR) (NYSE:SNN), Boston Scientific Corporation (NYSE:BSX), and St. Jude Medical, Inc. (NYSE:STJ). All of these stocks are in the medical appliances & equipment industry and their market caps match ZMH’s market cap.

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