Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Tivity Health, Inc. (NASDAQ:TVTY)? The smart money sentiment can provide an answer to this question.
Is Tivity Health, Inc. (NASDAQ:TVTY) a cheap investment now? Investors who are in the know are taking a pessimistic view. The number of long hedge fund positions fell by 4 in recent months. Our calculations also showed that TVTY isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are viewed as underperforming, old financial tools of years past. While there are more than 8000 funds with their doors open at the moment, Our researchers look at the bigwigs of this club, around 750 funds. These money managers direct the lion’s share of the smart money’s total capital, and by monitoring their first-class equity investments, Insider Monkey has discovered a number of investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 new hedge fund action surrounding Tivity Health, Inc. (NASDAQ:TVTY).
How have hedgies been trading Tivity Health, Inc. (NASDAQ:TVTY)?
Heading into the third quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in TVTY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, HG Vora Capital Management was the largest shareholder of Tivity Health, Inc. (NASDAQ:TVTY), with a stake worth $78.1 million reported as of the end of March. Trailing HG Vora Capital Management was Miller Value Partners, which amassed a stake valued at $44.3 million. D E Shaw, Renaissance Technologies, and Marshall Wace LLP were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Tivity Health, Inc. (NASDAQ:TVTY) has witnessed a decline in interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedge funds that decided to sell off their entire stakes heading into Q3. Intriguingly, Steve Cohen’s Point72 Asset Management said goodbye to the largest stake of all the hedgies monitored by Insider Monkey, worth an estimated $1.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $1.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to Tivity Health, Inc. (NASDAQ:TVTY). These stocks are Clovis Oncology Inc (NASDAQ:CLVS), Enova International Inc (NYSE:ENVA), Boingo Wireless Inc (NASDAQ:WIFI), and Central Securities Corporation (NYSE:CET). This group of stocks’ market caps resemble TVTY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLVS | 24 | 268085 | -5 |
| ENVA | 20 | 153666 | 0 |
| WIFI | 14 | 94487 | -3 |
| CET | 2 | 11334 | -1 |
| Average | 15 | 131893 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $188 million in TVTY’s case. Clovis Oncology Inc (NASDAQ:CLVS) is the most popular stock in this table. On the other hand Central Securities Corporation (NYSE:CET) is the least popular one with only 2 bullish hedge fund positions. Tivity Health, Inc. (NASDAQ:TVTY) 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 TVTY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TVTY were disappointed as the stock returned 1.2% 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.
