Centene Corp (CNC): Are Hedge Funds Right About This Stock?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make a proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Centene Corp (NYSE:CNC) investors should be aware of an increase in the hedge fund interest of late. Centene Corp (NYSE:CNC) was in 37 hedge funds’ portfolios at the end of the third quarter of 2015. There were 22 hedge funds in our database with Centene Corp (NYSE:CNC) holdings at the end of the previous quarter. At the end of this article, we will also compare Centene Corp (NYSE:CNC) to other stocks, including Jones Lang LaSalle Inc (NYSE:JLL), Omega Healthcare Investors Inc (NYSE:OHI), and Camden Property Trust (NYSE:CPT) to get a better sense of its popularity.

In the financial world, there are several gauges market participants can use to size up stocks. Two of the most underrated gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can trounce the S&P 500 by a significant amount (see the details here).

Now, let’s take a glance at the latest action surrounding Centene Corp (NYSE:CNC).

How are hedge funds trading Centene Corp (NYSE:CNC)?

At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 68% from the second quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’ AQR Capital Management has the biggest position in Centene Corp (NYSE:CNC), worth close to $109.1 million, accounting for 0.2% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, which holds a $103 million position; the fund has 0.2% of its 13F portfolio invested in the stock. The remaining members of the smart money that hold long positions comprise Roberto Mignone’s Bridger Management, Jeremy Green’s Redmile Group and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Redmile Group created the largest position in Centene Corp (NYSE:CNC). Redmile Group had $40.5 million invested in the company at the end of the quarter. Millennium Management also initiated a $15.9 million position during the quarter. The other funds with brand new CNC positions are Carl Tiedemann and Michael Tiedemann’s TIG Advisors, David Keidan’s Buckingham Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s go over hedge fund activity in other stocks similar to Centene Corp (NYSE:CNC). We will take a look at Jones Lang LaSalle Inc (NYSE:JLL), Omega Healthcare Investors Inc (NYSE:OHI), Camden Property Trust (NYSE:CPT), and Fomento Economico Mexicano SAB (ADR) (NYSE:FMX). This group of stocks’ market caps is similar to Centene Corp (NYSE:CNC)’s market cap.

As you can see, these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $264 million. That figure was $489 million in Centene Corp (NYSE:CNC)’s case. Jones Lang LaSalle Inc (NYSE:JLL) is the most popular stock in this table. On the other hand, Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks, Centene Corp (NYSE:CNC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.