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Were Hedge Funds Right About Piling Into Becton, Dickinson and Company (BDX)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtBecton, Dickinson and Company (NYSE:BDX) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Becton, Dickinson and Company (NYSE:BDX) a good investment now? Investors who are in the know were getting more bullish. The number of long hedge fund bets advanced by 6 in recent months. Our calculations also showed that BDX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). BDX was in 56 hedge funds’ portfolios at the end of March. There were 50 hedge funds in our database with BDX holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are many gauges investors put to use to value stocks. Two of the less known gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top money managers can outclass the market by a significant amount (see the details here).

David Blood

David Blood of Generation Investment Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, this trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost gold prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the latest hedge fund action encompassing Becton, Dickinson and Company (NYSE:BDX).

Hedge fund activity in Becton, Dickinson and Company (NYSE:BDX)

Heading into the second quarter of 2020, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BDX over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BDX A Good Stock To Buy?

More specifically, Generation Investment Management was the largest shareholder of Becton, Dickinson and Company (NYSE:BDX), with a stake worth $394.1 million reported as of the end of September. Trailing Generation Investment Management was Cantillon Capital Management, which amassed a stake valued at $276.6 million. Intermede Investment Partners, Balyasny Asset Management, and Partner Fund Management 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 Intermede Investment Partners allocated the biggest weight to Becton, Dickinson and Company (NYSE:BDX), around 5.08% of its 13F portfolio. Grisanti Brown & Partners is also relatively very bullish on the stock, setting aside 4.78 percent of its 13F equity portfolio to BDX.

Now, key money managers were leading the bulls’ herd. Partner Fund Management, managed by Christopher James, assembled the most outsized position in Becton, Dickinson and Company (NYSE:BDX). Partner Fund Management had $34.7 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $28.1 million position during the quarter. The other funds with brand new BDX positions are Andrew Sandler’s Sandler Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Franklin Parlamis’s Aequim Alternative Investments.

Let’s check out hedge fund activity in other stocks similar to Becton, Dickinson and Company (NYSE:BDX). These stocks are CME Group Inc (NASDAQ:CME), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX), Dominion Energy Inc. (NYSE:D), and Crown Castle International Corp. (NYSE:CCI). This group of stocks’ market values match BDX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CME 62 2265510 8
VRTX 56 3313662 3
D 34 371177 -3
CCI 40 1640829 2
Average 48 1897795 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 48 hedge funds with bullish positions and the average amount invested in these stocks was $1898 million. That figure was $1267 million in BDX’s case. CME Group Inc (NASDAQ:CME) is the most popular stock in this table. On the other hand Dominion Energy Inc. (NYSE:D) is the least popular one with only 34 bullish hedge fund positions. Becton, Dickinson and Company (NYSE:BDX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately BDX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BDX were disappointed as the stock returned 4.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.