Covidien plc (COV): Brosens, Adams and Other Smart Money Managers Are Bullish on Stock; Should You?


What has been going on at Covidien plc (NYSE:COV)? The stock was in 78 hedge funds’ portfolio at the end of September, including names like Frank Brosens and David Abrams, but, what’s more important is that COV investors should pay attention to an increase in enthusiasm from smart money in recent months, since this number increased from 70 funds that disclosed long positions at the end of the second quarter. With all of this in mind, let’s take a look at the new action surrounding Covidien plc (NYSE:COV). 

How are hedge funds trading Covidien plc (NYSE:COV)?

As we are in the fourth quarter, a total of 78 of the hedge funds tracked by Insider Monkey held long positions in this stock at the end of September, which represents a increase of 11% from the second quarter. But, what more important is, who are those ‘hedgies’ that have been boosting their positions of late.

As Insider Monkey data show, the largest hedge fund shareholder of Covidien plc (NYSE:COV), among the funds they track, is  Taconic Capital, led by Frank Brosens, which held a $857.7 million stake, with the fund holding 27.7% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Daniel S. Och’s OZ Management, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Matthew Halbower’s Pentwater Capital Management.

However, among the big pool on investors bullish on Covidien, there are some outstanding names, such as OZ Management, managed by Daniel S. Och, which established the biggest position in Covidien plc (NYSE:COV), with $469.1 million invested in the company at the end of the quarter. Moreover, David Abrams’s Abrams Capital Management also made a $226.7 million investment in the stock during the same period. The other funds with brand new COV positions are Jonathon Jacobson’s Highfields Capital Management, Michael A. Price and Amos Meron’s Empyrean Capital Partners, and Ross Margolies’s Stelliam Investment Management.

Why is this important?

There are over 8,000 funds trading at present, but many traders consider that they are outdated investment instruments and don’t pay them the attention that they deserve. However, hedge fund experts at Insider Monkey focus on the leaders of this group, around 700 funds, which oversee the lion’s share of the hedge fund industry’s total capital. By watching their top equity investments, Insider Monkey has formulated various investment strategies that have historically outstripped the broader indices. One of these strategies, which involves picking small cap stocks, exceeded the S&P 500 index by 18 percentage points annually for a decade in their back tests.

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