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Investor Turnover for Boston Scientific

The Boston Globe's Steven Syre has a fascinating column today about significant changes among Boston Scientific's outside investors since the company bought Guidant. Twelve of the firm's 20 largest investors are different from a year ago. Why? Because Wall Street has stopped considering Boston Scientific a growth company and started considering it a value company.

New investors think that the firm's stock is at or near bottom and that its management is capable of fixing its problems -- and that perhaps these problems aren't as bad as they've been made out to be. Hence, value investors such as Wellington Management Co. (which has become the largest outside investor) and Primecap Management have snapped up the stock, as have hedge funds managed by firms like D.E. Shaw & Co. and Paulson & Co. And growth and "momentum" investors have bailed. Boston Scientific has a history of defying expectations and overcoming short-term obstacles. A lot of folks seem to be betting on its management to pull off such feats again. (Full disclosure: One of my best friends is an analyst for Wellington, and another is a manager for D.E. Shaw. I have never discussed Boston Scientific or any other device company with either of them.)

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