Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Laboratory Corp. of America Holdings (NYSE:LH), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Laboratory Corp. of America Holdings (NYSE:LH) a bargain? Prominent investors are buying. The number of bullish hedge fund positions rose by 7 recently. Our calculations also showed that LH isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We’re going to analyze the new hedge fund action regarding Laboratory Corp. of America Holdings (NYSE:LH).
What have hedge funds been doing with Laboratory Corp. of America Holdings (NYSE:LH)?
At Q3’s end, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the second quarter of 2018. On the other hand, there were a total of 45 hedge funds with a bullish position in LH at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Iridian Asset Management held the most valuable stake in Laboratory Corp. of America Holdings (NYSE:LH), which was worth $227.1 million at the end of the third quarter. On the second spot was Ariel Investments which amassed $175.8 million worth of shares. Moreover, AQR Capital Management, Renaissance Technologies, and Wallace R. Weitz & Co. were also bullish on Laboratory Corp. of America Holdings (NYSE:LH), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have been driving this bullishness. Alyeska Investment Group, managed by Anand Parekh, initiated the biggest position in Laboratory Corp. of America Holdings (NYSE:LH). Alyeska Investment Group had $75.1 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $45.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Zach Schreiber’s Point State Capital, Josh Donfeld and David Rogers’s Castle Hook Partners, and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks similar to Laboratory Corp. of America Holdings (NYSE:LH). We will take a look at Splunk Inc (NASDAQ:SPLK), Grifols SA (NASDAQ:GRFS), Spectra Energy Partners, LP (NYSE:SEP), and McCormick & Company, Incorporated (NYSE:MKC). This group of stocks’ market values resemble LH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SPLK | 39 | 900559 | 4 |
| GRFS | 12 | 197680 | 1 |
| SEP | 5 | 38381 | -1 |
| MKC | 21 | 153091 | 0 |
| Average | 19.25 | 322428 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $322 million. That figure was $1.28 billion in LH’s case. Splunk Inc (NASDAQ:SPLK) is the most popular stock in this table. On the other hand Spectra Energy Partners, LP (NYSE:SEP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Laboratory Corp. of America Holdings (NYSE:LH) 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.
Disclosure: None. This article was originally published at Insider Monkey.
