At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
CVS Health Corp (NYSE:CVS) shareholders have witnessed an increase in hedge fund sentiment during the third quarter and CVS was included in the equity portfolios of 58 hedge funds’ portfolios at the end of the third quarter of 2016. There were 54 hedge funds in our database with CVS positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AbbVie Inc (NYSE:ABBV), Schlumberger Limited. (NYSE:SLB), and Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT) to gather more data points.
Follow Cvs Health Corp (NYSE:CVS)
Follow Cvs Health Corp (NYSE:CVS)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, we’re going to go over the new action regarding CVS Health Corp (NYSE:CVS).
Hedge fund activity in CVS Health Corp (NYSE:CVS)
At the end of September, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 7% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, David E. Shaw’s D E Shaw has the number one position in CVS Health Corp (NYSE:CVS), worth close to $616.8 million, accounting for 1.1% of its total 13F portfolio. On D E Shaw’s heels is Phill Gross and Robert Atchinson’s Adage Capital Management, with a $138.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain John Overdeck and David Siegel’s Two Sigma Advisors, Israel Englander’s Millennium Management and Charles de Vaulx’s International Value Advisers.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Soros Fund Management, managed by George Soros, established the largest call position in CVS Health Corp (NYSE:CVS). Soros Fund Management had $61.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $34.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Robert Pohly’s Samlyn Capital, and Ram Seshan Venkateswaran’s Vernier Capital.
Let’s check out hedge fund activity in other stocks similar to CVS Health Corp (NYSE:CVS). These stocks are AbbVie Inc (NYSE:ABBV), Schlumberger Limited. (NYSE:SLB), Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT), and Mastercard Inc (NYSE:MA). This group of stocks’ market caps are closest to CVS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABBV | 56 | 4170340 | -1 |
| SLB | 59 | 1564821 | 4 |
| NTT | 10 | 182797 | -1 |
| MA | 84 | 7481554 | 2 |
As you can see these stocks had an average of 52 hedge funds with bullish positions and the average amount invested in these stocks was $3.35 billion. That figure was $2.0 billion in CVS’s case. Mastercard Inc (NYSE:MA) is the most popular stock in this table. On the other hand Nippon Telegraph & Telephone Corp (ADR) (NYSE:NTT) is the least popular one with only 10 bullish hedge fund positions. CVS Health Corp (NYSE:CVS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MA might be a better candidate to consider a long position.
