With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Intuitive Surgical, Inc. (NASDAQ:ISRG).
Is ISRG a good stock to buy now? Intuitive Surgical, Inc. (NASDAQ:ISRG) investors should be aware of an increase in activity from the world’s largest hedge funds lately. Intuitive Surgical, Inc. (NASDAQ:ISRG) was in 50 hedge funds’ portfolios at the end of September. The all time high for this statistics is 51. Our calculations also showed that ISRG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a lot of tools stock traders employ to size up stocks. A duo of the less utilized tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outpace the market by a very impressive amount (see the details here).
At Insider Monkey we scour multiple sources to uncover 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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. With all of this in mind let’s view the fresh hedge fund action encompassing Intuitive Surgical, Inc. (NASDAQ:ISRG).
How are hedge funds trading Intuitive Surgical, Inc. (NASDAQ:ISRG)?
At the end of the third quarter, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ISRG over the last 21 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Intuitive Surgical, Inc. (NASDAQ:ISRG) was held by Fisher Asset Management, which reported holding $825.5 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $262.7 million position. Other investors bullish on the company included PEAK6 Capital Management, AQR Capital Management, and Adage Capital Management. In terms of the portfolio weights assigned to each position Unio Capital allocated the biggest weight to Intuitive Surgical, Inc. (NASDAQ:ISRG), around 4.73% of its 13F portfolio. Aubrey Capital Management is also relatively very bullish on the stock, dishing out 2.19 percent of its 13F equity portfolio to ISRG.
Consequently, key money managers have jumped into Intuitive Surgical, Inc. (NASDAQ:ISRG) headfirst. Bridgewater Associates, managed by Ray Dalio, established the largest position in Intuitive Surgical, Inc. (NASDAQ:ISRG). Bridgewater Associates had $18.8 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also initiated a $8.1 million position during the quarter. The other funds with new positions in the stock are Andrew Dalrymple and Barry McCorkell’s Aubrey Capital Management, Chen Tianqiao’s Shanda Asset Management, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Intuitive Surgical, Inc. (NASDAQ:ISRG) but similarly valued. These stocks are British American Tobacco plc (NYSE:BTI), Mondelez International Inc (NASDAQ:MDLZ), Caterpillar Inc. (NYSE:CAT), American Express Company (NYSE:AXP), Diageo plc (NYSE:DEO), HSBC Holdings plc (NYSE:HSBC), and Gilead Sciences, Inc. (NASDAQ:GILD). This group of stocks’ market valuations are similar to ISRG’s market valuation.
|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 33.7 hedge funds with bullish positions and the average amount invested in these stocks was $3964 million. That figure was $1351 million in ISRG’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 7 bullish hedge fund positions. Intuitive Surgical, Inc. (NASDAQ:ISRG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ISRG is 79.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately ISRG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ISRG were disappointed as the stock returned 5.9% since the end of September (through 12/2) and underperformed 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.