Is Boston Scientific Corporation (NYSE:BSX) a buy right now? The smart money is in a pessimistic mood. The number of bullish hedge fund positions fell by 5 recently.
In the eyes of most market participants, hedge funds are viewed as unimportant, old investment tools of the past. While there are over 8000 funds in operation at present, we at Insider Monkey look at the leaders of this club, close to 450 funds. Most estimates calculate that this group controls the lion’s share of the hedge fund industry’s total asset base, and by keeping an eye on their highest performing stock picks, we have unsheathed a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 23.3 percentage points in 8 months (see all of our picks from August).
Just as key, optimistic insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are a number of incentives for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would buy. Many empirical studies have demonstrated the market-beating potential of this method if “monkeys” know what to do (learn more here).
With these “truths” under our belt, it’s important to take a look at the latest action surrounding Boston Scientific Corporation (NYSE:BSX).
Hedge fund activity in Boston Scientific Corporation (NYSE:BSX)
Heading into Q2, a total of 38 of the hedge funds we track were bullish in this stock, a change of -12% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably.
Of the funds we track, Ric Dillon’s Diamond Hill Capital had the most valuable position in Boston Scientific Corporation (NYSE:BSX), worth close to $134.3 million, accounting for 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is Leon Cooperman of Omega Advisors, with a $128.7 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other peers that hold long positions include Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Jim Simons’s Renaissance Technologies and Cliff Asness’s AQR Capital Management.
Judging by the fact that Boston Scientific Corporation (NYSE:BSX) has witnessed a declination in interest from the smart money, we can see that there exists a select few money managers who were dropping their entire stakes last quarter. Intriguingly, Boaz Weinstein’s Saba Capital dropped the largest stake of the 450+ funds we monitor, worth about $12 million in stock., and Dmitry Balyasny of Balyasny Asset Management was right behind this move, as the fund dropped about $11 million worth. These moves are important to note, as aggregate hedge fund interest fell by 5 funds last quarter.
What have insiders been doing with Boston Scientific Corporation (NYSE:BSX)?
Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past six months. Over the latest six-month time period, Boston Scientific Corporation (NYSE:BSX) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Boston Scientific Corporation (NYSE:BSX). These stocks are Varian Medical Systems, Inc. (NYSE:VAR), Zimmer Holdings, Inc. (NYSE:ZMH), Edwards Lifesciences Corp (NYSE:EW), St. Jude Medical, Inc. (NYSE:STJ), and Smith & Nephew plc (ADR) (NYSE:SNN). This group of stocks are in the medical appliances & equipment industry and their market caps match BSX’s market cap.