As a $24 billion medical technology giant, it's no surprise that there's plenty of retail and institutional interest in Stryker (NYSE: SYK). Nonetheless, I was surprised to find out that last year, Stryker was the No. 2 most-owned stock by investment clubs, as measured by the folks at Better Investing. If retail investors were so high on the stock, it got me to thinking: What's the consensus sentiment view on Stryker?
Turns out, the view is "somewhat bullish." Let's have a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts are mostly bullish on Stryker. Data from Yahoo! Finance captures their collective feeling:
| Strong Buy | 9 |
| Buy | 10 |
| Hold | 13 |
| Sell | 1 |
| Strong Sell | 0 |
Nine analysts have a "strong buy" rating, with an additional 10 "buys." Most analysts (13) are a "hold," with a lone "sell" rating.
For purposes of this exercise, we'll classify analyst opinion as bullish-to-neutral.
2. Insider buying
Next we'll look at insider buying and selling. Over the past year, Stryker insiders have sold $39.65 million worth of their company stock. During the same time period, insiders bought about $118,000. (Data from Form4Oracle.)
These amounts aren't all that meaningful relative to Stryker's $24 billion market cap. And while insiders sell stock for a whole host of reasons -- to pay for a house or tuition, to diversify assets, and so forth -- it is a good sign to see some insider buying. Still, selling far outweighs buying, so for Stryker, we'll classify insider buying/selling as neutral-leaning-bearish.
3. Guru buying
Next, we'll look at "guru" ownership of the stock. According to GuruFocus, gurus have been relatively quiet the past two quarters. The only guru activity in the quarter ended Dec. 31 was Don Yacktman adding to his existing stake and George Soros completely liquidating his small 7,600-share position. In the quarter ended Sept. 30, George Soros was lightening his Stryker stake prior to selling out, while Yacktman, John Hussman, and Mario Gabelli were buying shares.
Gurus have been mostly buying Stryker, although not in large quantities. Still, we'll call the trend bullish.
4. Retail investor community sentiment
For retail investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. Stryker has the highest possible five-star rating.
5. Short-sellers
Next we'll look at whether short-sellers are circling the stock. There are 13.4 million Stryker shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 3.4%. That's higher than some of the other stocks I've profiled in this series, but still isn't in the danger zone like, say, Barnes & Noble, a struggling operator with a short interest of 13.3% right now. For determining sentiment, we'll call the short interest trend "bullish-to-neutral."
6. Does Buffett own it?
This is the "cherry on top" test, and in Stryker's case, it's a no: Berkshire Hathaway does not own shares.
Adding it up
The CAPS community loves Stryker. Analysts and gurus are bullish, and short-sellers aren't betting against the stock in a significant way. Although the insider buying/selling picture is neutral-to-bearish and Stryker fails our final test -- Buffett's possible ownership -- Stryker still comes out with a "somewhat bullish" consensus sentiment.
Of course, you can't base an investment philosophy on who likes the stock you like, and a consensus opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." There doesn't seem to be a sense of either fear or greed circling Stryker right now, though.
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Stryker. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Stryker's movements, and for more analysis on the company, make sure you add it to your Watchlist.
