Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Welltower Inc. (NYSE:WELL), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Welltower Inc. (NYSE:WELL) a healthy stock for your portfolio? Prominent investors are getting more bullish. The number of bullish hedge fund bets advanced by 6 recently. Our calculations also showed that well isn’t among the 30 most popular stocks among hedge funds.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a look at the new hedge fund action regarding Welltower Inc. (NYSE:WELL).
What does the smart money think about Welltower Inc. (NYSE:WELL)?
At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WELL over the last 15 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Welltower Inc. (NYSE:WELL) was held by Zimmer Partners, which reported holding $313.1 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $218.2 million position. Other investors bullish on the company included AEW Capital Management, Adage Capital Management, and AQR Capital Management.
Now, some big names were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, created the most outsized position in Welltower Inc. (NYSE:WELL). Zimmer Partners had $313.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $5.4 million investment in the stock during the quarter. The other funds with brand new WELL positions are Matthew Tewksbury’s Stevens Capital Management, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Welltower Inc. (NYSE:WELL). These stocks are General Mills, Inc. (NYSE:GIS), Dollar General Corp. (NYSE:DG), Southern Copper Corporation (NYSE:SCCO), and Yum! Brands, Inc. (NYSE:YUM). All of these stocks’ market caps match WELL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GIS | 32 | 511389 | -5 |
| DG | 31 | 1121114 | 1 |
| SCCO | 13 | 235031 | -2 |
| YUM | 32 | 1109729 | -2 |
| Average | 27 | 744316 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $744 million. That figure was $811 million in WELL’s case. General Mills, Inc. (NYSE:GIS) is the most popular stock in this table. On the other hand Southern Copper Corporation (NYSE:SCCO) is the least popular one with only 13 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 calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on WELL as the stock returned 5.3% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
