Hedge Funds Are Cashing Out Of Tivity Health, Inc. (TVTY)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Tivity Health, Inc. (NASDAQ:TVTY) in this article.

Tivity Health, Inc. (NASDAQ:TVTY) investors should be aware of a decrease in hedge fund sentiment of late. Tivity Health, Inc. (NASDAQ:TVTY) was in 22 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 24. Our calculations also showed that TVTY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Bill Miller of Miller Value Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to check out the key hedge fund action regarding Tivity Health, Inc. (NASDAQ:TVTY).

Do Hedge Funds Think TVTY Is A Good Stock To Buy Now?

At the end of June, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TVTY over the last 24 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, HG Vora Capital Management held the most valuable stake in Tivity Health, Inc. (NASDAQ:TVTY), which was worth $126.3 million at the end of the second quarter. On the second spot was Hudson Executive Capital which amassed $126.2 million worth of shares. Miller Value Partners, Arrowstreet Capital, and Point72 Asset 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 Hudson Executive Capital allocated the biggest weight to Tivity Health, Inc. (NASDAQ:TVTY), around 8.38% of its 13F portfolio. HG Vora Capital Management is also relatively very bullish on the stock, setting aside 5.7 percent of its 13F equity portfolio to TVTY.

Due to the fact that Tivity Health, Inc. (NASDAQ:TVTY) has faced a decline in interest from the smart money, logic holds that there was a specific group of money managers who sold off their entire stakes heading into Q3. It’s worth mentioning that Malcolm Levine’s Dendur Capital dropped the biggest position of the 750 funds monitored by Insider Monkey, valued at close to $14.8 million in stock. Frank Fu’s fund, CaaS Capital, also cut its stock, about $2.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to Tivity Health, Inc. (NASDAQ:TVTY). These stocks are AZZ Incorporated (NYSE:AZZ), National Energy Services Reunited Corp. (NASDAQ:NESR), SunOpta, Inc. (NASDAQ:STKL), Scorpio Tankers Inc. (NYSE:STNG), Gulfport Energy Corporation (NYSE:GPOR), Ideanomics, Inc. (NASDAQ:IDEX), and Talos Energy, Inc. (NYSE:TALO). This group of stocks’ market caps are closest to TVTY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $225 million. That figure was $453 million in TVTY’s case. SunOpta, Inc. (NASDAQ:STKL) is the most popular stock in this table. On the other hand Ideanomics, Inc. (NASDAQ:IDEX) is the least popular one with only 6 bullish hedge fund positions. Tivity Health, Inc. (NASDAQ:TVTY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TVTY is 70.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately TVTY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TVTY were disappointed as the stock returned -4.5% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.