Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Boston Scientific Corporation (NYSE:BSX) based on that data.
Boston Scientific Corporation (NYSE:BSX) investors should pay attention to a decrease in hedge fund sentiment recently. Boston Scientific Corporation (NYSE:BSX) was in 58 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 66. Our calculations also showed that BSX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to check out the fresh hedge fund action encompassing Boston Scientific Corporation (NYSE:BSX).
Do Hedge Funds Think BSX Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the third quarter of 2020. On the other hand, there were a total of 54 hedge funds with a bullish position in BSX a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Viking Global held the most valuable stake in Boston Scientific Corporation (NYSE:BSX), which was worth $1078.2 million at the end of the fourth quarter. On the second spot was Farallon Capital which amassed $475.9 million worth of shares. D E Shaw, OrbiMed Advisors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Blue Whale Capital allocated the biggest weight to Boston Scientific Corporation (NYSE:BSX), around 5.44% of its 13F portfolio. Bloom Tree Partners is also relatively very bullish on the stock, earmarking 4.21 percent of its 13F equity portfolio to BSX.
Due to the fact that Boston Scientific Corporation (NYSE:BSX) has experienced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of money managers that decided to sell off their full holdings last quarter. It’s worth mentioning that Robert Pitts’s Steadfast Capital Management sold off the biggest investment of all the hedgies watched by Insider Monkey, comprising close to $362.1 million in stock. Jeremy Green’s fund, Redmile Group, also sold off its stock, about $54.3 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Boston Scientific Corporation (NYSE:BSX) but similarly valued. These stocks are Northrop Grumman Corporation (NYSE:NOC), UBS Group AG (NYSE:UBS), Southern Copper Corporation (NYSE:SCCO), Waste Management, Inc. (NYSE:WM), Koninklijke Philips NV (NYSE:PHG), Bank of Montreal (NYSE:BMO), and Monster Beverage Corp (NASDAQ:MNST). This group of stocks’ market values are closest to BSX’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $1163 million. That figure was $3633 million in BSX’s case. Monster Beverage Corp (NASDAQ:MNST) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Boston Scientific Corporation (NYSE:BSX) is more popular among hedge funds. Our overall hedge fund sentiment score for BSX is 78.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on BSX as the stock returned 21.3% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.