Is Welltower Inc. (NYSE:WELL) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Welltower Inc. (NYSE:WELL) was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 27. WELL has experienced an increase in activity from the world’s largest hedge funds lately. There were 19 hedge funds in our database with WELL positions at the end of the second quarter. Our calculations also showed that WELL isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 take a gander at the recent hedge fund action encompassing Welltower Inc. (NYSE:WELL).
Stuart Zimmer of Zimmer Partners
Do Hedge Funds Think WELL Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in WELL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Welltower Inc. (NYSE:WELL) was held by Zimmer Partners, which reported holding $290.9 million worth of stock at the end of September. It was followed by Healthcor Management LP with a $50.9 million position. Other investors bullish on the company included Adage Capital Management, LMR Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Zimmer Partners allocated the biggest weight to Welltower Inc. (NYSE:WELL), around 4.58% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, designating 2.2 percent of its 13F equity portfolio to WELL.
As aggregate interest increased, key money managers were breaking ground themselves. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the most outsized position in Welltower Inc. (NYSE:WELL). LMR Partners had $30.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $5.2 million position during the quarter. The following funds were also among the new WELL investors: Greg Poole’s Echo Street Capital Management, Allon Hellmann’s Full18 Capital, and Kevin Parker’s Sustainable Insight Capital Management.
Let’s now review hedge fund activity in other stocks similar to Welltower Inc. (NYSE:WELL). We will take a look at TransDigm Group Incorporated (NYSE:TDG), Rockwell Automation Inc. (NYSE:ROK), First Republic Bank (NYSE:FRC), International Flavors & Fragrances Inc (NYSE:IFF), CoStar Group Inc (NASDAQ:CSGP), PPG Industries, Inc. (NYSE:PPG), and BeiGene, Ltd. (NASDAQ:BGNE). All of these stocks’ market caps are closest to WELL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TDG | 63 | 7188554 | 6 |
| ROK | 29 | 519693 | 4 |
| FRC | 35 | 918312 | 1 |
| IFF | 46 | 2838241 | -6 |
| CSGP | 29 | 2585035 | -20 |
| PPG | 30 | 318414 | 4 |
| BGNE | 16 | 6418381 | -5 |
| Average | 35.4 | 2969519 | -2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $2970 million. That figure was $509 million in WELL’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 16 bullish hedge fund positions. Welltower Inc. (NYSE:WELL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WELL is 38.8. 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 negative signal and 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately WELL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WELL investors were disappointed as the stock returned 4.8% since the end of September (through 12/31) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
