Is Edwards Lifesciences Corp (EW) Going to Burn These Hedge Funds?

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Edwards Lifesciences Corp (NYSE:EW) was in 21 hedge funds’ portfolio at the end of March. EW investors should be aware of an increase in hedge fund sentiment in recent months. There were 16 hedge funds in our database with EW positions at the end of the previous quarter.

Edwards Lifesciences Corp (NYSE:EW)In the eyes of most market participants, hedge funds are seen as unimportant, outdated financial vehicles of yesteryear. While there are more than 8000 funds trading today, we at Insider Monkey hone in on the elite of this group, close to 450 funds. It is widely believed that this group controls the majority of the hedge fund industry’s total asset base, and by tracking their highest performing investments, we have determined a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as key, bullish insider trading sentiment is a second way to break down the financial markets. As the old adage goes: there are lots of stimuli for an upper level exec to drop shares of his or her company, but just one, very clear reason why they would buy. Many empirical studies have demonstrated the useful potential of this strategy if investors know where to look (learn more here).

Consequently, let’s take a look at the recent action encompassing Edwards Lifesciences Corp (NYSE:EW).

How have hedgies been trading Edwards Lifesciences Corp (NYSE:EW)?

At the end of the first quarter, a total of 21 of the hedge funds we track held long positions in this stock, a change of 31% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully.

According to our comprehensive database, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management had the biggest position in Edwards Lifesciences Corp (NYSE:EW), worth close to $127.2 million, accounting for 3.9% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $32.7 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds that hold long positions include SAC Subsidiary’s CR Intrinsic Investors, Arthur B Cohen and Joseph Healey’s Healthcor Management LP and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

As aggregate interest increased, key hedge funds were breaking ground themselves. CR Intrinsic Investors, managed by SAC Subsidiary, established the most valuable position in Edwards Lifesciences Corp (NYSE:EW). CR Intrinsic Investors had 15.2 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey’s Healthcor Management LP also initiated a $14.4 million position during the quarter. The other funds with brand new EW positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jacob Gottlieb’s Visium Asset Management, and Israel Englander’s Millennium Management.

Insider trading activity in Edwards Lifesciences Corp (NYSE:EW)

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time period, Edwards Lifesciences Corp (NYSE:EW) has experienced 2 unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Edwards Lifesciences Corp (NYSE:EW). These stocks are Zimmer Holdings, Inc. (NYSE:ZMH), St. Jude Medical, Inc. (NYSE:STJ), Varian Medical Systems, Inc. (NYSE:VAR), Boston Scientific Corporation (NYSE:BSX), and Smith & Nephew plc (ADR) (NYSE:SNN). This group of stocks are in the medical appliances & equipment industry and their market caps are similar to EW’s market cap.

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