Coronavirus is probably the #1 concern in investors’ minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 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 HCA Healthcare Inc (NYSE:HCA) in this article.
Is HCA Healthcare Inc (NYSE:HCA) ready to rally soon? The smart money is turning bullish. The number of bullish hedge fund bets improved by 3 recently. Our calculations also showed that HCA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of formulas stock market investors use to size up publicly traded companies. Some of the less known formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best money managers can beat the market by a healthy amount (see the details here).
Larry Robbins of Glenview Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now we’re going to check out the key hedge fund action encompassing HCA Healthcare Inc (NYSE:HCA).
Hedge fund activity in HCA Healthcare Inc (NYSE:HCA)
Heading into the first quarter of 2020, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the previous quarter. By comparison, 56 hedge funds held shares or bullish call options in HCA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in HCA Healthcare Inc (NYSE:HCA) was held by Glenview Capital, which reported holding $881.7 million worth of stock at the end of September. It was followed by Lyrical Asset Management with a $454.6 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Cryder Capital allocated the biggest weight to HCA Healthcare Inc (NYSE:HCA), around 15.03% of its 13F portfolio. Tavio Capital is also relatively very bullish on the stock, dishing out 12.3 percent of its 13F equity portfolio to HCA.
Now, key money managers have been driving this bullishness. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, initiated the most outsized position in HCA Healthcare Inc (NYSE:HCA). Woodline Partners had $47.5 million invested in the company at the end of the quarter. Samuel Isaly’s OrbiMed Advisors also initiated a $28.1 million position during the quarter. The other funds with brand new HCA positions are Kevin Molloy’s Iron Triangle Partners, John Brennan’s Sirios Capital Management, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as HCA Healthcare Inc (NYSE:HCA) but similarly valued. We will take a look at TransCanada Corporation (NYSE:TRP), Equinix Inc (NASDAQ:EQIX), Honda Motor Co Ltd (NYSE:HMC), and Prudential Public Limited Company (NYSE:PUK). This group of stocks’ market values match HCA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRP | 22 | 210177 | 2 |
| EQIX | 43 | 1639342 | 3 |
| HMC | 9 | 148249 | -2 |
| PUK | 6 | 47203 | -6 |
| Average | 20 | 511243 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $3586 million in HCA’s case. Equinix Inc (NASDAQ:EQIX) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks HCA Healthcare Inc (NYSE:HCA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Unfortunately HCA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HCA were disappointed as the stock returned -8.3% during the first two months of 2020 (through March 2nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
