Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Cerner Corporation (NASDAQ:CERN) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Cerner Corporation (NASDAQ:CERN) was in 36 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 41. CERN has experienced a decrease in support from the world’s most elite money managers recently. There were 38 hedge funds in our database with CERN holdings at the end of June. Our calculations also showed that CERN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Ricky Sandler of Eminence Capital
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. Keeping this in mind let’s take a glance at the recent hedge fund action regarding Cerner Corporation (NASDAQ:CERN).
Do Hedge Funds Think CERN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 34 hedge funds with a bullish position in CERN a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the number one position in Cerner Corporation (NASDAQ:CERN), worth close to $228.9 million, comprising 4.2% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which holds a $184.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise John Overdeck and David Siegel’s Two Sigma Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Seth Rosen’s Nitorum Capital. In terms of the portfolio weights assigned to each position Nitorum Capital allocated the biggest weight to Cerner Corporation (NASDAQ:CERN), around 6.14% of its 13F portfolio. Starboard Value LP is also relatively very bullish on the stock, setting aside 4.19 percent of its 13F equity portfolio to CERN.
Due to the fact that Cerner Corporation (NASDAQ:CERN) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of money managers that slashed their entire stakes in the third quarter. Intriguingly, Mina Faltas’s Washington Harbour Partners sold off the largest stake of all the hedgies watched by Insider Monkey, comprising about $10 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also cut its stock, about $9.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Cerner Corporation (NASDAQ:CERN). These stocks are Ameren Corporation (NYSE:AEE), CGI Inc. (NYSE:GIB), Charles River Laboratories International Inc. (NYSE:CRL), Essex Property Trust Inc (NYSE:ESS), MGM Resorts International (NYSE:MGM), Trimble Inc. (NASDAQ:TRMB), and KeyCorp (NYSE:KEY). All of these stocks’ market caps resemble CERN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEE | 14 | 298780 | -9 |
| GIB | 18 | 336354 | 4 |
| CRL | 46 | 1294531 | 2 |
| ESS | 21 | 264061 | 0 |
| MGM | 50 | 2740827 | -9 |
| TRMB | 34 | 1814792 | 7 |
| KEY | 36 | 399496 | -4 |
| Average | 31.3 | 1021263 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $1021 million. That figure was $1280 million in CERN’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Ameren Corporation (NYSE:AEE) is the least popular one with only 14 bullish hedge fund positions. Cerner Corporation (NASDAQ:CERN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CERN is 59.9. 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 gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on CERN as the stock returned 29.7% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Cerner Corp (NASDAQ:CERN)
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Disclosure: None. This article was originally published at Insider Monkey.
