Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Becton, Dickinson and Company (NYSE:BDX).
Is BDX stock a buy or sell? The best stock pickers were taking a bullish view. The number of bullish hedge fund positions advanced by 3 lately. Becton, Dickinson and Company (NYSE:BDX) was in 65 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 62. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BDX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 62 hedge funds in our database with BDX holdings at the end of September.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind we’re going to take a gander at the key hedge fund action surrounding Becton, Dickinson and Company (NYSE:BDX).
Do Hedge Funds Think BDX Is A Good Stock To Buy Now?
At the end of December, a total of 65 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BDX over the last 22 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Becton, Dickinson and Company (NYSE:BDX) was held by Fundsmith LLP, which reported holding $1087.3 million worth of stock at the end of December. It was followed by Generation Investment Management with a $962.3 million position. Other investors bullish on the company included Cantillon Capital Management, Intermede Investment Partners, and Millennium Management. In terms of the portfolio weights assigned to each position Columbus Point allocated the biggest weight to Becton, Dickinson and Company (NYSE:BDX), around 6.6% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, earmarking 6.25 percent of its 13F equity portfolio to BDX.
Consequently, some big names were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, created the most outsized position in Becton, Dickinson and Company (NYSE:BDX). Viking Global had $128 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $56.8 million investment in the stock during the quarter. The other funds with brand new BDX positions are Steve Cohen’s Point72 Asset Management, Renaissance Technologies, and Joseph Sirdevan’s Galibier Capital Management.
Let’s now review hedge fund activity in other stocks similar to Becton, Dickinson and Company (NYSE:BDX). These stocks are KE Holdings Inc (NYSE:BEKE), Infosys Limited (NYSE:INFY), Activision Blizzard, Inc. (NASDAQ:ATVI), China Petroleum & Chemical Corp (NYSE:SNP), U.S. Bancorp (NYSE:USB), Chubb Limited (NYSE:CB), and BP plc (NYSE:BP). This group of stocks’ market caps resemble BDX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.6 hedge funds with bullish positions and the average amount invested in these stocks was $2569 million. That figure was $3961 million in BDX’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 13 bullish hedge fund positions. Becton, Dickinson and Company (NYSE:BDX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BDX is 76.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and beat the market again by 1.6 percentage points. Unfortunately BDX wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on BDX were disappointed as the stock returned -4.8% since the end of December (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Becton Dickinson & Co (NYSE:BDX)
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Disclosure: None. This article was originally published at Insider Monkey.