In this article we will check out the progression of hedge fund sentiment towards Anthem Inc (NYSE:ANTM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Anthem Inc (NYSE:ANTM) going to take off soon? The smart money is reducing their bets on the stock. The number of bullish hedge fund bets retreated by 1 in recent months. Our calculations also showed that ANTM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ANTM was in 70 hedge funds’ portfolios at the end of the first quarter of 2020. There were 71 hedge funds in our database with ANTM holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are seen as underperforming, outdated financial vehicles of the past. While there are more than 8000 funds trading today, Our experts choose to focus on the aristocrats of this club, approximately 850 funds. These money managers watch over most of the hedge fund industry’s total asset base, and by keeping track of their top equity investments, Insider Monkey has revealed several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Andreas Halvorsen of Viking Global
At Insider Monkey 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 believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we asked astrophysicist Neil deGrasse Tyson about Tesla, Elon Musk, and his top stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the key hedge fund action surrounding Anthem Inc (NYSE:ANTM).
Hedge fund activity in Anthem Inc (NYSE:ANTM)
At Q1’s end, a total of 70 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -1% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ANTM over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Orbis Investment Management held the most valuable stake in Anthem Inc (NYSE:ANTM), which was worth $708.9 million at the end of the third quarter. On the second spot was Viking Global which amassed $411.1 million worth of shares. Farallon Capital, Eagle Capital Management, and AQR Capital Management 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 Brave Warrior Capital allocated the biggest weight to Anthem Inc (NYSE:ANTM), around 11.44% of its 13F portfolio. Thunderbird Partners is also relatively very bullish on the stock, setting aside 9.59 percent of its 13F equity portfolio to ANTM.
Because Anthem Inc (NYSE:ANTM) has experienced falling interest from the aggregate hedge fund industry, it’s easy to see that there were a few money managers who were dropping their full holdings last quarter. At the top of the heap, Larry Robbins’s Glenview Capital sold off the largest position of the 750 funds followed by Insider Monkey, worth about $226.9 million in stock. Aaron Cowen’s fund, Suvretta Capital Management, also dumped its stock, about $124.4 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Anthem Inc (NYSE:ANTM). These stocks are The Estee Lauder Companies Inc (NYSE:EL), The Southern Company (NYSE:SO), Colgate-Palmolive Company (NYSE:CL), and Rio Tinto Group (NYSE:RIO). This group of stocks’ market valuations match ANTM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EL | 44 | 1074094 | -6 |
| SO | 33 | 810355 | 3 |
| CL | 53 | 1865405 | 1 |
| RIO | 20 | 1108363 | -1 |
| Average | 37.5 | 1214554 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $1215 million. That figure was $3550 million in ANTM’s case. Colgate-Palmolive Company (NYSE:CL) is the most popular stock in this table. On the other hand Rio Tinto Group (NYSE:RIO) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Anthem Inc (NYSE:ANTM) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on ANTM as the stock returned 22.1% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
