We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Cardinal Health, Inc. (NYSE:CAH) based on that data.
Is Cardinal Health, Inc. (NYSE:CAH) an attractive investment right now? Hedge funds were getting less bullish. The number of bullish hedge fund bets were trimmed by 4 in recent months. Cardinal Health, Inc. (NYSE:CAH) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 49. Our calculations also showed that CAH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Mason Hawkins of Southeastern Asset Management
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 let’s go over the recent hedge fund action encompassing Cardinal Health, Inc. (NYSE:CAH).
Do Hedge Funds Think CAH Is A Good Stock To Buy Now?
At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards CAH over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Pzena Investment Management held the most valuable stake in Cardinal Health, Inc. (NYSE:CAH), which was worth $146.2 million at the end of the third quarter. On the second spot was D E Shaw which amassed $126.1 million worth of shares. Millennium Management, Arrowstreet Capital, and Ariel Investments 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 HealthInvest Partners AB allocated the biggest weight to Cardinal Health, Inc. (NYSE:CAH), around 2.37% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, setting aside 2.23 percent of its 13F equity portfolio to CAH.
Judging by the fact that Cardinal Health, Inc. (NYSE:CAH) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that elected to cut their full holdings last quarter. Intriguingly, Stephen DuBois’s Camber Capital Management said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, worth about $71.4 million in call options, and Michael Burry’s Scion Asset Management was right behind this move, as the fund sold off about $49 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cardinal Health, Inc. (NYSE:CAH) but similarly valued. We will take a look at Clarivate Plc (NYSE:CLVT), Alliant Energy Corporation (NYSE:LNT), Zendesk Inc (NYSE:ZEN), News Corp (NASDAQ:NWSA), Loews Corporation (NYSE:L), Solaredge Technologies Inc (NASDAQ:SEDG), and Nordson Corporation (NASDAQ:NDSN). This group of stocks’ market caps match CAH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLVT | 32 | 4723546 | -9 |
| LNT | 17 | 76693 | 1 |
| ZEN | 53 | 1557704 | 1 |
| NWSA | 34 | 737689 | -3 |
| L | 27 | 175121 | -1 |
| SEDG | 33 | 594467 | -4 |
| NDSN | 29 | 310857 | -5 |
| Average | 32.1 | 1168011 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.1 hedge funds with bullish positions and the average amount invested in these stocks was $1168 million. That figure was $665 million in CAH’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Alliant Energy Corporation (NYSE:LNT) is the least popular one with only 17 bullish hedge fund positions. Cardinal Health, Inc. (NYSE:CAH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CAH is 49.4. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CAH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CAH were disappointed as the stock returned -6.5% since the end of September (through 11/30) 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.
