Medtronic, Inc. (NYSE:MDT) investors should be aware of a decrease in activity from the world’s largest hedge funds lately.
If you’d ask most stock holders, hedge funds are viewed as unimportant, old financial vehicles of years past. While there are over 8000 funds trading at the moment, we at Insider Monkey look at the top tier of this group, close to 450 funds. Most estimates calculate that this group oversees the majority of all hedge funds’ total asset base, and by tracking their top stock picks, we have come up with a number of investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy beat 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 (explore the details and some picks here).
Equally as integral, bullish insider trading activity is another way to parse down the world of equities. Just as you’d expect, there are many motivations for a bullish insider to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this method if piggybackers understand where to look (learn more here).
With these “truths” under our belt, we’re going to take a gander at the recent action encompassing Medtronic, Inc. (NYSE:MDT).
What have hedge funds been doing with Medtronic, Inc. (NYSE:MDT)?
At the end of the fourth quarter, a total of 34 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings meaningfully.
Of the funds we track, Diamond Hill Capital, managed by Ric Dillon, holds the largest position in Medtronic, Inc. (NYSE:MDT). Diamond Hill Capital has a $217 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Relational Investors, managed by Ralph V. Whitworth, which held a $185 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include John A. Levin’s Levin Capital Strategies, Bill Miller’s Legg Mason Capital Management and Ken Griffin’s Citadel Investment Group.
Seeing as Medtronic, Inc. (NYSE:MDT) has witnessed a declination in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedge funds that slashed their entire stakes last quarter. Interestingly, Clint Carlson’s Carlson Capital dropped the largest investment of all the hedgies we track, worth an estimated $24 million in stock., and Peter J. Eichler Jr. of Aletheia Research and Management was right behind this move, as the fund dumped about $9 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading Medtronic, Inc. (NYSE:MDT)?
Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time frame, Medtronic, Inc. (NYSE:MDT) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results exhibited by Insider Monkey’s tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Medtronic, Inc. (NYSE:MDT) shareholders fit into this picture quite nicely.
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