Should You Buy Intuitive Surgical, Inc. (ISRG)?

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Is Intuitive Surgical, Inc. (NASDAQ:ISRG) going to take off soon? The smart money is becoming more confident. The number of bullish hedge fund positions improved by 1 lately.

Intuitive Surgical, Inc. (NASDAQ:ISRG)

According to most traders, hedge funds are assumed to be underperforming, old financial vehicles of years past. While there are greater than 8000 funds in operation at present, we hone in on the leaders of this club, close to 450 funds. It is widely believed that this group oversees most of the smart money’s total asset base, and by keeping an eye on their best stock picks, we have deciphered a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outstripped 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as key, optimistic insider trading activity is a second way to break down the world of equities. There are plenty of stimuli for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the valuable potential of this strategy if you know where to look (learn more here).

Consequently, it’s important to take a look at the key action surrounding Intuitive Surgical, Inc. (NASDAQ:ISRG).

How have hedgies been trading Intuitive Surgical, Inc. (NASDAQ:ISRG)?

At Q1’s end, a total of 35 of the hedge funds we track were bullish in this stock, a change of 3% from the first quarter. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably.

According to our comprehensive database, Andreas Halvorsen’s Viking Global had the most valuable position in Intuitive Surgical, Inc. (NASDAQ:ISRG), worth close to $908.8 million, accounting for 5.4% of its total 13F portfolio. Sitting at the No. 2 spot is Stephen Mandel of Lone Pine Capital, with a $436.5 million position; 2.3% of its 13F portfolio is allocated to the company. Remaining hedgies that are bullish include Jim Simons’s Renaissance Technologies, Phill Gross and Robert Atchinson’s Adage Capital Management and Steven Cohen’s SAC Capital Advisors.

As aggregate interest increased, key hedge funds have jumped into Intuitive Surgical, Inc. (NASDAQ:ISRG) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, created the most outsized position in Intuitive Surgical, Inc. (NASDAQ:ISRG). Healthcor Management LP had 86 million invested in the company at the end of the quarter. John Lykouretzos’s Hoplite Capital Management also made a $77.2 million investment in the stock during the quarter. The other funds with brand new ISRG positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw, and John Fichthorn’s Dialectic Capital Management.

What have insiders been doing with Intuitive Surgical, Inc. (NASDAQ:ISRG)?

Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past half-year. Over the last 180-day time frame, Intuitive Surgical, Inc. (NASDAQ:ISRG) has seen zero unique insiders buying, and 7 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 Intuitive Surgical, Inc. (NASDAQ:ISRG). These stocks are Smith & Nephew plc (ADR) (NYSE:SNN), Boston Scientific Corporation (NYSE:BSX), St. Jude Medical, Inc. (NYSE:STJ), Zimmer Holdings, Inc. (NYSE:ZMH), and Stryker Corporation (NYSE:SYK). This group of stocks are the members of the medical appliances & equipment industry and their market caps are closest to ISRG’s market cap.

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