In this article we will check out the progression of hedge fund sentiment towards Boston Scientific Corporation (NYSE:BSX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Boston Scientific (BSX) stock a buy or sell? Prominent investors were in a bearish mood. The number of long hedge fund bets retreated by 3 recently. Boston Scientific Corporation (NYSE:BSX) was in 58 hedge funds’ portfolios at the end of December. The all time high for this statistic is 66. Our calculations also showed that BSX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
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At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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). Keeping this in mind we’re going to analyze the recent hedge fund action regarding Boston Scientific Corporation (NYSE:BSX).
Do Hedge Funds Think BSX Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the third quarter of 2020. On the other hand, there were a total of 54 hedge funds with a bullish position in BSX a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in Boston Scientific Corporation (NYSE:BSX), which was worth $1078.2 million at the end of the fourth quarter. On the second spot was Farallon Capital which amassed $475.9 million worth of shares. D E Shaw, OrbiMed Advisors, and Citadel Investment Group 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 Blue Whale Capital allocated the biggest weight to Boston Scientific Corporation (NYSE:BSX), around 5.44% of its 13F portfolio. Bloom Tree Partners is also relatively very bullish on the stock, setting aside 4.21 percent of its 13F equity portfolio to BSX.
Since Boston Scientific Corporation (NYSE:BSX) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there is a sect of hedge funds that slashed their entire stakes last quarter. Interestingly, Robert Pitts’s Steadfast Capital Management cut the largest stake of all the hedgies watched by Insider Monkey, worth about $362.1 million in stock, and Jeremy Green’s Redmile Group was right behind this move, as the fund said goodbye to about $54.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Boston Scientific Corporation (NYSE:BSX) but similarly valued. We will take a look at Northrop Grumman Corporation (NYSE:NOC), UBS Group AG (NYSE:UBS), Southern Copper Corporation (NYSE:SCCO), Waste Management, Inc. (NYSE:WM), Koninklijke Philips NV (NYSE:PHG), Bank of Montreal (NYSE:BMO), and Monster Beverage Corp (NASDAQ:MNST). This group of stocks’ market caps are closest to BSX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NOC | 40 | 1507811 | -2 |
| UBS | 18 | 184346 | 1 |
| SCCO | 23 | 572140 | -4 |
| WM | 37 | 2937888 | -1 |
| PHG | 8 | 53896 | -2 |
| BMO | 11 | 45889 | 1 |
| MNST | 44 | 2837202 | -6 |
| Average | 25.9 | 1162739 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $1163 million. That figure was $3633 million in BSX’s case. Monster Beverage Corp (NASDAQ:MNST) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Boston Scientific Corporation (NYSE:BSX) is more popular among hedge funds. Our overall hedge fund sentiment score for BSX is 78.4. 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. 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 returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on BSX as the stock returned 6.2% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
