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How Did Medtronic, Inc. (MDT) Compare Against Top Hedge Fund Stocks in 2019?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space. Nevertheless, it is also possible to identify cheap large cap stocks by following the footsteps of best performing hedge funds. In this article we are going to take a look at smart money sentiment towards Medtronic, Inc. (NYSE:MDT).

Medtronic, Inc. (NYSE:MDT) has seen an increase in hedge fund interest lately. Our calculations also showed that MDT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the eyes of most shareholders, hedge funds are seen as unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open today, Our experts look at the leaders of this club, about 750 funds. These hedge fund managers handle most of the hedge fund industry’s total asset base, and by monitoring their highest performing picks, Insider Monkey has brought to light numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Ric Dillon Diamond Hill Capital

Ric Dillon of Diamond Hill Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to analyze the recent hedge fund action surrounding Medtronic, Inc. (NYSE:MDT).

Hedge fund activity in Medtronic, Inc. (NYSE:MDT)

At Q3’s end, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MDT over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MDT A Good Stock To Buy?

Among these funds, Diamond Hill Capital held the most valuable stake in Medtronic, Inc. (NYSE:MDT), which was worth $408.5 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $401.8 million worth of shares. D E Shaw, Adage Capital Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Medtronic, Inc. (NYSE:MDT), around 11.32% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, designating 2.82 percent of its 13F equity portfolio to MDT.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Suvretta Capital Management, managed by Aaron Cowen, initiated the largest position in Medtronic, Inc. (NYSE:MDT). Suvretta Capital Management had $94.5 million invested in the company at the end of the quarter. Mike Masters’s Masters Capital Management also initiated a $43.4 million position during the quarter. The other funds with brand new MDT positions are David E. Shaw’s D E Shaw, Andrew Sandler’s Sandler Capital Management, and Perella Weinberg Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Medtronic, Inc. (NYSE:MDT) but similarly valued. We will take a look at SAP AG (NYSE:SAP), TOTAL S.A. (NYSE:TOT), Adobe Systems Incorporated (NASDAQ:ADBE), and salesforce.com, inc. (NYSE:CRM). This group of stocks’ market values resemble MDT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAP 18 1578895 1
TOT 17 1094583 4
ADBE 92 8325284 0
CRM 102 9433280 20
Average 57.25 5108011 6.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 57.25 hedge funds with bullish positions and the average amount invested in these stocks was $5108 million. That figure was $2120 million in MDT’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand TOTAL S.A. (NYSE:TOT) is the least popular one with only 17 bullish hedge fund positions. Medtronic, Inc. (NYSE:MDT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately MDT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MDT investors were disappointed as the stock returned 27.2% in 2019 (as of 12/23) and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 65 percent of these stocks already outperformed the market in 2019.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Disclosure: None. This article was originally published at Insider Monkey.

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