With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Hill-Rom Holdings, Inc. (NYSE:HRC).
Is Hill-Rom Holdings, Inc. (NYSE:HRC) ready to rally soon? The smart money is taking a pessimistic view. The number of long hedge fund bets retreated by 2 in recent months. Our calculations also showed that HRC isn’t among the 30 most popular stocks among hedge funds (view the video below). HRC was in 27 hedge funds’ portfolios at the end of June. There were 29 hedge funds in our database with HRC positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 take a look at the key hedge fund action surrounding Hill-Rom Holdings, Inc. (NYSE:HRC).
How have hedgies been trading Hill-Rom Holdings, Inc. (NYSE:HRC)?
Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the first quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in HRC a year ago. 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, Select Equity Group held the most valuable stake in Hill-Rom Holdings, Inc. (NYSE:HRC), which was worth $148.7 million at the end of the second quarter. On the second spot was Millennium Management which amassed $143.6 million worth of shares. Moreover, Fisher Asset Management, Polar Capital, and AQR Capital Management were also bullish on Hill-Rom Holdings, Inc. (NYSE:HRC), allocating a large percentage of their portfolios to this stock.
Because Hill-Rom Holdings, Inc. (NYSE:HRC) has witnessed falling interest from the aggregate hedge fund industry, we can see that there exists a select few fund managers who were dropping their entire stakes last quarter. Interestingly, Anand Parekh’s Alyeska Investment Group sold off the biggest investment of the 750 funds followed by Insider Monkey, worth an estimated $37.5 million in stock, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital was right behind this move, as the fund sold off about $9.1 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hill-Rom Holdings, Inc. (NYSE:HRC) but similarly valued. We will take a look at The Toro Company (NYSE:TTC), Alteryx, Inc. (NYSE:AYX), Gardner Denver Holdings, Inc. (NYSE:GDI), and LINE Corporation (NYSE:LN). All of these stocks’ market caps are closest to HRC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTC | 24 | 620869 | 8 |
| AYX | 38 | 1209758 | 7 |
| GDI | 24 | 293865 | 1 |
| LN | 9 | 46156 | 4 |
| Average | 23.75 | 542662 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $543 million. That figure was $628 million in HRC’s case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 9 bullish hedge fund positions. Hill-Rom Holdings, Inc. (NYSE:HRC) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 HRC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on HRC were disappointed as the stock returned 0.8% 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.
