The latest 13F season is commencing, when many money managers issue mandatory reports on their holdings. It can be worthwhile to pay attention to these documents, as you might get an investment idea or two by seeing what some major investors have been buying and selling.
For example, consider GAMCO Investors (GBL +1.02%), the diversified asset-manager and financial-services company headed by billionaire value investor Mario Gabelli. According to its recently released 13F statement, the company sold all of its shares of robotic surgery specialist MAKO Surgical, known for its RIO robotic orthopedic system. There's no mystery there, as Stryker (SYK 2.98%) bought the company for $30 per share, sending the stock up more than 80% on the news in September.
Those who were interested in MAKO might want to look at Stryker. It's not a robotic pure play, but as my Fool colleague Stephen Simpson recently noted, Stryker "had a surprisingly strong quarter in its reconstructive products business, and the long-term outlook for instruments, endoscopy, and neuro/spine are all appealing." It has been gaining market share in some of these markets and is testing total knee replacements with MAKO systems, with an eye to further expand the machines' potential. Stryker stock yields 1.5%, and its dividend has more than tripled over the past five years.
What it means
The MAKO acquisition bodes well for Intuitive Surgical (ISRG 0.81%), MAKO Surgical's far bigger peer, as it reflects a generous valuation and positive expectations for robotic surgery. It might bode even better for smaller robotic specialist Accuray NASDAQ: ARAY), as some speculate that it, too, could get bought out.
Intuitive Surgical, once a highflying stock-market darling, has had a tougher time lately, in part due to questions about the safety and effectiveness of its robotic systems. Many believe the company will be vindicated, though; in the meantime, while domestic sales have pulled back as hospitals rein in spending, sales have been growing abroad. Intuitive Surgical is also looking to expand the uses of its machines, so that they can perform more operations.
Meanwhile, though CyberKnife system maker Accuray is small and still unprofitable, its losses have been shrinking while its backlog grows. The CyberKnife kills cancer cells with laser-driven radiation while leaving healthy cells alone. Accuray also offers the TomoTherapy 3-D CT imaging system.
GAMCO's latest 13F report didn't include Intuitive Surgical, Accuray, or Stryker in its list of holdings, but you might want to consider one or more of them for your portfolio, if you're bullish on the medical advances they're offering.
