This Metric Says You Are Smart to Sell STERIS Corp (NYSE:STE)

Is STERIS Corp (NYSE:STE) a healthy stock for your portfolio? The smart money is selling. The number of long hedge fund bets stayed the same which is a slightly negative development in our experience.


In today’s marketplace, there are many methods investors can use to watch their holdings. A duo of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the market by a superb margin (see just how much).

Equally as integral, bullish insider trading sentiment is another way to parse down the marketplace. As the old adage goes: there are many incentives for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this strategy if “monkeys” understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a gander at the key action regarding STERIS Corp (NYSE:STE).

How have hedgies been trading STERIS Corp (NYSE:STE)?

In preparation for this year, a total of 17 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Breeden Capital Management, managed by Richard Breeden, holds the biggest position in STERIS Corp (NYSE:STE). Breeden Capital Management has a $59 million position in the stock, comprising 33.9% of its 13F portfolio. On Breeden Capital Management’s heels is Fisher Asset Management, managed by Ken Fisher, which held a $57 million position; 0% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.

Judging by the fact that STERIS Corp (NYSE:STE) has faced declining sentiment from the smart money, we can see that there were a few fund managers who sold off their entire stakes in Q4. Intriguingly, Christopher MedlockáJames’s Partner Fund Management dropped the biggest position of the “upper crust” of funds we track, valued at about $6 million in stock., and Mike Vranos of Ellington was right behind this move, as the fund dumped about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about STERIS Corp (NYSE:STE)?

Insider buying is most useful when the company in focus has experienced transactions within the past 180 days. Over the last 180-day time period, STERIS Corp (NYSE:STE) has seen zero unique insiders buying, and 10 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and STERIS Corp (NYSE:STE) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.