Covidien plc (NYSE:COV) is a highly debated healthcare stock, but one indicator suggests that it might be the biggest steal of 2013.
In the financial world, there are plenty of indicators investors can use to watch Mr. Market. A pair of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best fund managers can outpace their index-focused peers by a solid amount (see just how much).
Just as necessary, bullish insider trading activity is a second way to look at the stock market universe. Obviously, there are plenty of stimuli for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would buy. Several academic studies have demonstrated the valuable potential of this strategy if shareholders know what to do (learn more here).
Now that that’s out of the way, let’s examine the latest info surrounding Covidien plc (NYSE:COV).
How have hedgies been trading Covidien plc (NYSE:COV)?
In preparation for the third quarter, a total of 44 of the hedge funds we track were long in this stock, a change of 42% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully.
Now, certain bigger names have jumped into Covidien plc (NYSE:COV) headfirst. First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, created the most valuable position in Covidien plc (NYSE:COV). First Pacific Advisors LLC had 338.5 million invested in the company at the end of the quarter. Donald Yacktman’s Yacktman Asset Management also initiated a $113.5 million position during the quarter. The following funds were also among the new COV investors: D. E. Shaw’s D E Shaw, Phill Gross and Robert Atchinson’s Adage Capital Management, and Mario Gabelli’s GAMCO Investors.
What have insiders been doing with Covidien plc (NYSE:COV)?
Legal insider trading, particularly when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, Covidien plc (NYSE:COV) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Covidien plc (NYSE:COV). These stocks are DENTSPLY International Inc. (NASDAQ:XRAY), CareFusion Corporation (NYSE:CFN), C.R. Bard, Inc. (NYSE:BCR), Becton, Dickinson and Co. (NYSE:BDX), and Baxter International Inc. (NYSE:BAX). This group of stocks belong to the medical instruments & supplies industry and their market caps are closest to COV’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|DENTSPLY International Inc. (NASDAQ:XRAY)||10||0||4|
|CareFusion Corporation (NYSE:CFN)||34||0||7|
|C.R. Bard, Inc. (NYSE:BCR)||24||0||16|
|Becton, Dickinson and Co. (NYSE:BDX)||27||0||9|
|Baxter International Inc. (NYSE:BAX)||40||0||10|
Using the results explained by our strategies, regular investors should always pay attention to hedge fund and insider trading activity, and Covidien plc (NYSE:COV) shareholders fit into this picture quite nicely.