Does Cerner Corporation (NASDAQ:CERN) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
Cerner Corporation (NASDAQ:CERN) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 29 hedge funds’ portfolios at the end of June. At the end of this article we will also compare CERN to other stocks including Pioneer Natural Resources Company (NYSE:PXD), Eversource Energy (NYSE:ES), and Verisk Analytics, Inc. (NASDAQ:VRSK) to get a better sense of its popularity.
In the 21st century investor’s toolkit there are many metrics market participants can use to value their stock investments. A duo of the most innovative metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the broader indices by a significant margin (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the latest hedge fund action surrounding Cerner Corporation (NASDAQ:CERN).
How have hedgies been trading Cerner Corporation (NASDAQ:CERN)?
At Q2’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CERN over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Generation Investment Management held the most valuable stake in Cerner Corporation (NASDAQ:CERN), which was worth $241.6 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $227 million worth of shares. Moreover, Starboard Value LP, AQR Capital Management, and GLG Partners were also bullish on Cerner Corporation (NASDAQ:CERN), allocating a large percentage of their portfolios to this stock.
Because Cerner Corporation (NASDAQ:CERN) has witnessed falling interest from hedge fund managers, logic holds that there were a few money managers that decided to sell off their full holdings in the second quarter. Intriguingly, Renaissance Technologies sold off the largest stake of the 750 funds tracked by Insider Monkey, worth close to $44.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dropped about $32.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cerner Corporation (NASDAQ:CERN) but similarly valued. We will take a look at Pioneer Natural Resources Company (NYSE:PXD), Eversource Energy (NYSE:ES), Verisk Analytics, Inc. (NASDAQ:VRSK), and Synchrony Financial (NYSE:SYF). All of these stocks’ market caps resemble CERN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PXD | 48 | 841904 | -7 |
| ES | 21 | 780262 | 5 |
| VRSK | 30 | 694067 | 10 |
| SYF | 46 | 2515446 | 1 |
| Average | 36.25 | 1207920 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $1208 million. That figure was $1211 million in CERN’s case. Pioneer Natural Resources Company (NYSE:PXD) is the most popular stock in this table. On the other hand Eversource Energy (NYSE:ES) is the least popular one with only 21 bullish hedge fund positions. Cerner Corporation (NASDAQ:CERN) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately CERN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CERN investors were disappointed as the stock returned -6.8% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
