We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Sabra Health Care REIT Inc (NASDAQ:SBRA).
Is Sabra Health Care REIT Inc (NASDAQ:SBRA) an excellent investment today? Money managers were taking a bullish view. The number of bullish hedge fund positions advanced by 1 lately. Sabra Health Care REIT Inc (NASDAQ:SBRA) was in 21 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that SBRA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are numerous signals shareholders employ to value publicly traded companies. Some of the less utilized signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite investment managers can outperform the S&P 500 by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Bruce Kovner of Caxton Associates LP
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 take a look at the key hedge fund action surrounding Sabra Health Care REIT Inc (NASDAQ:SBRA).
Do Hedge Funds Think SBRA Is A Good Stock To Buy Now?
At the end of March, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in SBRA over the last 23 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Sabra Health Care REIT Inc (NASDAQ:SBRA), worth close to $15.6 million, corresponding to less than 0.1%% of its total 13F portfolio. Coming in second is Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $15.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions consist of Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Mountaineer Partners Management allocated the biggest weight to Sabra Health Care REIT Inc (NASDAQ:SBRA), around 5.85% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, dishing out 0.96 percent of its 13F equity portfolio to SBRA.
As one would reasonably expect, specific money managers were breaking ground themselves. Caxton Associates LP, managed by Bruce Kovner, assembled the most valuable position in Sabra Health Care REIT Inc (NASDAQ:SBRA). Caxton Associates LP had $0.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $0.4 million position during the quarter. The other funds with brand new SBRA positions are Mika Toikka’s AlphaCrest Capital Management and Parvinder Thiara’s Athanor Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sabra Health Care REIT Inc (NASDAQ:SBRA) but similarly valued. We will take a look at Ameris Bancorp (NASDAQ:ABCB), Franklin Electric Co. (NASDAQ:FELE), Univar Solutions Inc (NYSE:UNVR), Nektar Therapeutics (NASDAQ:NKTR), Desktop Metal, Inc. (NYSE:DM), Sleep Number Corporation (NASDAQ:SNBR), and Urban Outfitters, Inc. (NASDAQ:URBN). All of these stocks’ market caps are similar to SBRA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABCB | 16 | 101268 | -2 |
| FELE | 20 | 209341 | 3 |
| UNVR | 25 | 742227 | -6 |
| NKTR | 18 | 234537 | -1 |
| DM | 20 | 216231 | -4 |
| SNBR | 21 | 256554 | 5 |
| URBN | 23 | 140764 | -1 |
| Average | 20.4 | 271560 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $272 million. That figure was $112 million in SBRA’s case. Univar Solutions Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand Ameris Bancorp (NASDAQ:ABCB) is the least popular one with only 16 bullish hedge fund positions. Sabra Health Care REIT Inc (NASDAQ:SBRA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBRA is 57.1. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately SBRA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SBRA were disappointed as the stock returned 7.4% since the end of March (through 7/16) 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.
Follow Sabra Health Care Reit Inc. (NASDAQ:SBRA)
Follow Sabra Health Care Reit Inc. (NASDAQ:SBRA)
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Disclosure: None. This article was originally published at Insider Monkey.
