Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Nobilis Health Corp (USA) (NYSEMKT:HLTH) the right pick for your portfolio? The smart money is categorically becoming hopeful. The number of bullish hedge fund investments experienced an increase of 1 in recent months. HLTH was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 5 hedge funds in our database with HLTH holdings 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 Beigene Ltd (ADR) (NASDAQ:BGNE), Chimerix Inc (NASDAQ:CMRX), and Capitol Acquisition Corp III (NASDAQ:CLACU) to gather more data points.
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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, let’s take a look at the fresh action regarding Nobilis Health Corp (USA) (NYSEMKT:HLTH).
How have hedgies been trading Nobilis Health Corp (USA) (NYSEMKT:HLTH)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HLTH over the last 5 quarters. 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, Royce & Associates, led by Chuck Royce, holds the biggest position in Nobilis Health Corp (USA) (NYSEMKT:HLTH). According to regulatory filings, the fund has a $5.1 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Royce & Associates’s heels is Robert B. Gillam of McKinley Capital Management, with a $2 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish contain Cliff Asness’s AQR Capital Management, Renaissance Technologies, one of the biggest hedge funds in the world, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers have jumped into Nobilis Health Corp (USA) (NYSEMKT:HLTH) headfirst. Jim Simons’ Renaissance Technologies established the largest position in Nobilis Health Corp (USA) (NYSEMKT:HLTH), followed closely by Ken Griffin’s Citadel Investment Group, which made a $0.1 million investment in the stock during the quarter. The only other fund with a brand new HLTH position is Roger Ibbotson’s Zebra Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Nobilis Health Corp (USA) (NYSEMKT:HLTH) but similarly valued. We will take a look at Beigene Ltd (ADR) (NASDAQ:BGNE), Chimerix Inc (NASDAQ:CMRX), Capitol Acquisition Corp III (NASDAQ:CLACU), and B. Riley Financial Inc (NASDAQ:RILY). This group of stocks’ market values are closest to HLTH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BGNE | 15 | 122131 | 1 |
| CMRX | 15 | 40229 | 2 |
| CLACU | 13 | 128330 | 1 |
| RILY | 6 | 64365 | 0 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $8 million in HLTH’s case. Beigene Ltd (ADR) (NASDAQ:BGNE) is the most popular stock in this table. On the other hand B. Riley Financial Inc (NASDAQ:RILY) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Nobilis Health Corp (USA) (NYSEMKT:HLTH) is even less popular than RILY. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none.
