We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Tenet Healthcare Corp (NYSE:THC) and determine whether hedge funds skillfully traded this stock.
Tenet Healthcare Corp (NYSE:THC) investors should be aware of an increase in hedge fund sentiment lately. Tenet Healthcare Corp (NYSE:THC) was in 47 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that THC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to go over the new hedge fund action encompassing Tenet Healthcare Corp (NYSE:THC).
Larry Robbins of Glenview Capital
Do Hedge Funds Think THC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. By comparison, 33 hedge funds held shares or bullish call options in THC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Glenview Capital held the most valuable stake in Tenet Healthcare Corp (NYSE:THC), which was worth $574.9 million at the end of the third quarter. On the second spot was Viking Global which amassed $222.8 million worth of shares. Camber Capital Management, Centerbridge Partners, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nut Tree Capital allocated the biggest weight to Tenet Healthcare Corp (NYSE:THC), around 19.77% of its 13F portfolio. Centerbridge Partners is also relatively very bullish on the stock, designating 17.26 percent of its 13F equity portfolio to THC.
Consequently, some big names were leading the bulls’ herd. GoldenTree Asset Management, managed by Steven Tananbaum, initiated the most outsized position in Tenet Healthcare Corp (NYSE:THC). GoldenTree Asset Management had $31.5 million invested in the company at the end of the quarter. OrbiMed Advisors also initiated a $20.7 million position during the quarter. The other funds with brand new THC positions are Justin John Ferayorni’s Tamarack Capital Management, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Tenet Healthcare Corp (NYSE:THC). These stocks are RLX Technology Inc. (NYSE:RLX), Boyd Gaming Corporation (NYSE:BYD), Kohl’s Corporation (NYSE:KSS), Pilgrim’s Pride Corporation (NASDAQ:PPC), Old Republic International Corporation (NYSE:ORI), Starwood Property Trust, Inc. (NYSE:STWD), and PLDT Inc. (NYSE:PHI). This group of stocks’ market values resemble THC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RLX | 11 | 251879 | -1 |
| BYD | 37 | 779407 | 1 |
| KSS | 37 | 951330 | -3 |
| PPC | 25 | 254968 | 7 |
| ORI | 20 | 357593 | -6 |
| STWD | 12 | 161117 | 1 |
| PHI | 5 | 104426 | 0 |
| Average | 21 | 408674 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $409 million. That figure was $1905 million in THC’s case. Boyd Gaming Corporation (NYSE:BYD) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Tenet Healthcare Corp (NYSE:THC) is more popular among hedge funds. Our overall hedge fund sentiment score for THC is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on THC as the stock returned 11.6% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
