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Should You Avoid Medtronic Inc. (MDT)?

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks. However, hedge funds managers are also extremely good at picking stocks in other categories as evidenced by Goldman Sachs’ so-called VIP list, which includes the 50 most-owned stocks among hedge funds’ top ten holdings. This concentrated basket of stocks outpaced the S&P 500 Index on a quarterly basis 64% of the time between 2001 and 2015. So why don’t we check the hedge fund activity in Medtronic Inc. (NYSE:MDT) during the final quarter of 2015?

Medtronic Inc. (NYSE:MDT) shareholders have witnessed a decrease in hedge fund interest of late. MDT was in 57 hedge funds’ portfolios at the end of December. There were 58 hedge funds in our database with MDT positions at the end of the previous quarter. At the end of this article we will also compare MDT to other stocks including Cisco Systems, Inc. (NASDAQ:CSCO), Philip Morris International Inc. (NYSE:PM), and International Business Machines Corp. (NYSE:IBM) to get a better sense of its popularity.

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In the eyes of most stock holders, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are more than 8000 funds in operation today, Our researchers choose to focus on the moguls of this club, around 700 funds. These hedge fund managers have their hands on the majority of the hedge fund industry’s total capital, and by observing their top picks, Insider Monkey has discovered many investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Medtronic Inc. (NYSE:MDT) is an Irish-based medical technology, services, and solutions company that engages in the business of therapeutic medical technology, primarily specializing in implantable and interventional therapies. The company’s net sales for the first three quarters of fiscal 2016 that ended January 29 totaled $21.27 billion, which was up from $12.96 billion generated during the same period of the prior year. Nonetheless, much of this revenue growth was attributable to Medtronic’s acquisition of Covidien in January 2015. Covidien was acquired for a total consideration of $50 billion, which included $16 billion in cash and $34 billion of non-cash consideration. Medtronic’s top-line figure was also positively impacted by strong net sales in the U.S. and emerging markets. The shares of the medical devices company are 1% in the red year-to-date despite the company disappointing investors and analysts with its top-line figure for the third quarter of fiscal 2016. Medtronic Inc. (NYSE:MDT) delivered revenue of $6.93 billion for the quarter that ended January 29, which increased 6% year-on-year and missed analysts’ estimates of $6.99 billion.

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