Here is What Hedge Funds Think About Centene Corporation (CNC)

In this article we will check out the progression of hedge fund sentiment towards Centene Corporation (NYSE:CNC) 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.

Centene Corporation (NYSE:CNC) has experienced an increase in support from the world’s most elite money managers of late. Centene Corporation (NYSE:CNC) was in 50 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 71. Our calculations also showed that CNC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 we’re going to take a peek at the fresh hedge fund action regarding Centene Corporation (NYSE:CNC).

Alex Litowitz of Magnetar Capital

Do Hedge Funds Think CNC Is A Good Stock To Buy Now?

At Q3’s end, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CNC over the last 25 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Viking Global held the most valuable stake in Centene Corporation (NYSE:CNC), which was worth $615.9 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $284.9 million worth of shares. Maverick Capital, Lyrical Asset Management, and Glenview Capital 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 Dendur Capital allocated the biggest weight to Centene Corporation (NYSE:CNC), around 10.26% of its 13F portfolio. Dendur Capital is also relatively very bullish on the stock, setting aside 5.12 percent of its 13F equity portfolio to CNC.

Now, key hedge funds have been driving this bullishness. Dendur Capital, managed by Malcolm Levine, established the most outsized call position in Centene Corporation (NYSE:CNC). Dendur Capital had $68.5 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey’s Healthcor Management LP also made a $61.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital, Malcolm Levine’s Dendur Capital, and Joseph Samuels’s Islet Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Centene Corporation (NYSE:CNC) but similarly valued. These stocks are CRH PLC (NYSE:CRH), General Mills, Inc. (NYSE:GIS), SBA Communications Corporation (NASDAQ:SBAC), Yum! Brands, Inc. (NYSE:YUM), Cloudflare, Inc. (NYSE:NET), Mizuho Financial Group Inc. (NYSE:MFG), and Robinhood Markets Inc. (NASDAQ:HOOD). This group of stocks’ market values match CNC’s market value.

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 $1303 million. That figure was $2431 million in CNC’s case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 6 bullish hedge fund positions. Centene Corporation (NYSE:CNC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CNC is 77.1. 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. 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 still beat the market by 5.6 percentage points. Hedge funds were also right about betting on CNC as the stock returned 14.6% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.