What do the top Hedge Fund and Mutual Fund Gurus like in the Medical Equipment Industry? This article, the twenty-ninth in a series, identifies through a research of the latest available institutional 13-F filings the Gurus that are most invested in the Medical Equipment Industry, and the specific stocks within that Industry that they prefer to hold in their portfolios. Please note that I have also included in this group Medical Device, Medical Instrument, Medical Products and Medical Supplies Companies.
Also, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F Institutional filings are now beginning to come out. About 40% were out as of this weekend, and most should be filed by the end of this week. As such, once 13-F filings are complete for all Guru funds, in the next series starting the end of this week to the beginning of next week, I will bring to you the "Top New and Added Picks"
of Guru Funds by industry/sector detailing this time not the top holdings, but more importantly what ‘New’ positions the funds took and what existing positions they added to in the latest March 2011, quarter. Please check my article page
for previous articles in this series.
A Guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffett, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of Gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called Gurus.
The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, savvy investors may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the US Equity markets is somewhere in the $15 trillion range, and the total market capitalization of Medical Equipment, Devices, Products and Supply companies is $515 billion or 3.4% of the overall market. The Table lists the top six investment Gurus whose funds have invested at least 7% or more than two times the average. The following is a list of the top Medical Equipment and Supplies Company picks of Guru Funds over-concentrated in that Sector:
- Diversified healthcare companies such as Cardinal Health, Inc. (CAH), a distributor of pharmaceutical and medical products; operator of medical services facilities, and a developer medical and surgical products including disposable kits, drapes, gowns and other products; Becton Dickinson & Co (BDX), a developer of medical supplies, devices, instrument systems, and reagents used by healthcare institutions; McKesson Corp. (MCK), a provider of ethical drugs, health and beauty care products and medical supplies and equipment to pharmacies and hospitals.
- Beckman Coulter Inc. (BEC), a developer of biomedical testing systems and supplies for use in medical research, clinical trials and drug discovery, currently under acquisition by Danaher Corp. (DHR), a Conglomerate including manufacturing of water treatment and vapor recovery systems, fuel dispensers, digital imaging systems and test products.
- Baxter International Inc. (BAX), a developer of medical devices and pharmaceuticals to treat hemophilia, immune disorder and infectious diseases.
- Hologic Inc. (HOLX), a developer of imaging systems and diagnostic and surgical products focused on the healthcare needs of women.
- Orthopedic implants and Surgical instruments companies Stryker Corp. (SYK), a developer of orthopedic implants, surgical instruments, imaging systems and operating room and emergency medical equipment; and Zimmer Holdings Inc. (ZMH), a developer of orthopedic and dental reconstructive implants, trauma products and related surgical products.
- Illumina Inc. (ILMN), a developer of integrated systems for the large scale analysis of genetic variation and biological function.
- Bard CR Inc. (BCR), a developer of medical, surgical, diagnostic and patient care devices for use in hospitals and extended care facilities.
- Integra Lifesciences Holdings (IART), a developer of medical devices, implants, and biomaterials used in neurosurgery, extremity reconstructions and general surgery.
- Life Technologies Corp. (LIFE), a developer of research tools and reagents to improve gene expression, analysis and cloning techniques.
- Carefusion Corp. (CFN), a developer of systems that helps healthcare providers prevent medication errors, reduce infections, and manage medications.
- Intuitive Surgical (ISRG), a developer of advanced surgical system designed to improve open surgery and minimally invasive surgery.
- Greatbatch Inc. (GB), a developer of power sources and components for implantable medical devices such as pacemakers and neurostimulators.
- Symmetry Medical Inc. (SMA), a developer of implants and related products for the dental, orthopedic, osteobiologic and endoscopic device markets.
- Allscripts Healthcare Solutions (MDRX), a provider of clinical, connectivity and patient information software applications for healthcare providers.
- Chinese Medical Equipment companies Mindray Medical International ADS (MR), a Chinese developer of patient monitoring, life support and in-vitro diagnostic products and medical imaging systems; and China Kanghui Holdings ADS (KH), a Chinese developer of proprietary orthopedic implants and associated instruments for domestic and emerging markets.
Fund and Guru
Type of Fund
Assets Under Management
Percent Equity Portfolio invested in Equities of Medical Equipment and Supplies Companies
Major Medical Equipment and Supplies Company positions in Portfolio
Greenlight Capital Inc. (David Einhorn)
Hedge Fund - Shareholder Activist
$ 5 billion
CAH, CFN, BDX
Glenview Capital (Larry Robbins)
Hedge Fund – Multi-strategy
$ 6.4 billion
LIFE, MCK, BAX
Hussman Econometrics Advisors, Inc. (John Hussman)
$ 6.3 billion
LIFE, ILMN, BCR, SYK, IART, ISRG
Eton Park (Eric Mindich)
Hedge Fund - Multi-Strategy
$ 8.1 billion
ZMH, BAX, MR, BEC (under acquisition by DHR)
Joho Capital LLC (Robert Karr)
Hedge Fund - Long/Short
$ 600 million
Tremblant Capital Group (Brett Barakett)
$ 1.9 billion
HOLX, GB, SMA, MDRX
Hedge Fund Greenlight Capital, founded in 1996 by David Einhorn, manages a series of value-oriented alternative investment vehicles including hedge funds and reinsurer Greenlight Capital Re. He focuses on intrinsic value in making investments, which is generally calculated by summing the future income generated by an asset and discounting it to the present value, and is thus different from the more commonly used market value and book value of the security. He is also a shareholder activist investor, meaning that the fund can take large stakes in target investments and then can use its influence resulting from the ownership to effect change at these companies, with the objective of eventually selling them for a tidy profit.
Hedge Fund Glenview Capital Management, founded in 2001 by CEO Larry Robbins, is a multi-strategy fund focused on making large bets on large-cap stocks, often taking an activist approach to some large bets. The fund assets of almost $7 billion are concentrated in usually 60-80 positions, and are split between Glenview Funds, a short fund, and Little Arbor Funds, a multi-strategy fund.
Dr. Hussman, founder of Hussman Econometrics Advisors manages the Hussman Funds, which are diversified, no-load mutual funds for investors seeking long-term investment returns, with added emphasis on capital protection in unfavorable market conditions. Prior to managing the Hussman Funds, he was a professor at the University of Michigan. He is widely known for his criticism of the U.S. Treasury and the Federal Reserve and for predicting the 2008-2009 U.S. recession, and as of late 2009, he is calling for another financial crisis due to bad policy choices made by the US government.
Eton Park Capital Management launched in 2004 and has over $12 billion in assets under management (AUM). Prior to founding Eton Park, Mr. Mindich was a partner at Goldman Sachs (GS
), becoming the youngest partner there at the age of 27. Investors in the fund generally have committed their capital for between three and five years, which is considerably longer than the quarterly redemption notices characteristic of many hedge funds.
Joho Capital, with $600 million in assets under management, was founded by Robert Karr in 1996. Mr. Karr is one of the Tiger Cubs, so called because they learned to pick stocks at Julian Robertson's legendary hedge fund Tiger Management LLC. The fund is generally concentrated in new technologies, with over 40% of the current allocation in Chinese equities.
Tremblant Capital Group, a hedge fund formed in 2001 by Brett Barakett, invests in long/short strategies.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.