Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can 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 over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Zimmer Biomet Holdings Inc (NYSE:ZBH).
Is Zimmer Biomet Holdings Inc (NYSE:ZBH) a buy here? Hedge funds are becoming less hopeful. The number of bullish hedge fund bets shrunk by 4 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Hartford Financial Services Group Inc (NYSE:HIG), TELUS Corporation (USA) (NYSE:TU), and Fidelity National Information Services (NYSE:FIS) to gather more data points.
With all of this in mind, we’re going to check out the latest action surrounding Zimmer Biomet Holdings Inc (NYSE:ZBH).
Hedge fund activity in Zimmer Biomet Holdings Inc (NYSE:ZBH)
Heading into Q4, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Visium Asset Management, managed by Jacob Gottlieb, holds the biggest position in Zimmer Biomet Holdings Inc (NYSE:ZBH). Visium Asset Management has a $76.5 million position in the stock, comprising 1% of its 13F portfolio. The second most bullish fund manager is Levin Capital Strategies, led by John A. Levin, holding a $75.6 million position; 1.3% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include D E Shaw, John Overdeck and David Siegel’s Two Sigma Advisors and David Harding’s Winton Capital Management.
Seeing as Zimmer Biomet Holdings Inc (NYSE:ZBH) has experienced falling interest from the smart money, it’s safe to say that there were a few money managers that elected to cut their entire stakes by the end of the third quarter. Interestingly, Eric Mindich’s Eton Park Capital dumped the largest stake of all the hedgies monitored by Insider Monkey, totaling about $124.8 million in call options. Nick Niell’s fund, Arrowgrass Capital Partners, also dropped its call options, about $109.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Zimmer Biomet Holdings Inc (NYSE:ZBH) but similarly valued. These stocks are Hartford Financial Services Group Inc (NYSE:HIG), TELUS Corporation (USA) (NYSE:TU), Fidelity National Information Services (NYSE:FIS), and Ventas, Inc. (NYSE:VTR). This group of stocks’ market values resemble ZBH’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $845 million. That figure was $683 million in ZBH’s case. Hartford Financial Services Group Inc (NYSE:HIG) is the most popular stock in this table. On the other hand TELUS Corporation (USA) (NYSE:TU) is the least popular one with only 11 bullish hedge fund positions. Zimmer Biomet Holdings Inc (NYSE:ZBH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard HIG might be a better candidate to consider a long position.