Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Anthem Inc (NYSE:ANTM) to find out whether there were any major changes in hedge funds’ views.
Is Anthem Inc (NYSE:ANTM) a good stock to buy now? ANTM was in 65 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 73. ANTM shareholders have witnessed a decrease in activity from the world’s largest hedge funds of late. There were 69 hedge funds in our database with ANTM positions at the end of the second quarter. Our calculations also showed that ANTM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most traders, hedge funds are perceived as unimportant, outdated financial tools of the past. While there are greater than 8000 funds in operation at present, Our researchers hone in on the top tier of this group, around 850 funds. These investment experts direct the lion’s share of the smart money’s total capital, and by tailing their unrivaled picks, Insider Monkey has unearthed numerous investment strategies that have historically beaten 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 per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Boykin Curry of Eagle Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to view the fresh hedge fund action surrounding Anthem Inc (NYSE:ANTM).
How have hedgies been trading Anthem Inc (NYSE:ANTM)?
At third quarter’s end, a total of 65 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in ANTM over the last 21 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, William B. Gray’s Orbis Investment Management has the most valuable position in Anthem Inc (NYSE:ANTM), worth close to $932 million, amounting to 7.3% of its total 13F portfolio. Sitting at the No. 2 spot is Eagle Capital Management, led by Boykin Curry, holding a $694 million position; 2.5% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish include Farallon Capital, Cliff Asness’s AQR Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Anthem Inc (NYSE:ANTM), around 9.16% of its 13F portfolio. Orbis Investment Management is also relatively very bullish on the stock, dishing out 7.33 percent of its 13F equity portfolio to ANTM.
Judging by the fact that Anthem Inc (NYSE:ANTM) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that elected to cut their full holdings heading into Q4. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $10.5 million in stock, and Michael Hintze’s CQS Cayman LP was right behind this move, as the fund sold off about $7.5 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 4 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Anthem Inc (NYSE:ANTM). These stocks are Becton, Dickinson and Company (NYSE:BDX), Equinix Inc (NASDAQ:EQIX), The TJX Companies, Inc. (NYSE:TJX), Dominion Energy Inc. (NYSE:D), Colgate-Palmolive Company (NYSE:CL), FedEx Corporation (NYSE:FDX), and Air Products & Chemicals, Inc. (NYSE:APD). This group of stocks’ market caps are similar to ANTM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BDX | 62 | 1939356 | 9 |
| EQIX | 42 | 2270352 | -7 |
| TJX | 78 | 2853294 | 6 |
| D | 37 | 967030 | 4 |
| CL | 47 | 1540716 | -3 |
| FDX | 71 | 2579950 | 25 |
| APD | 49 | 745333 | 12 |
| Average | 55.1 | 1842290 | 6.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.1 hedge funds with bullish positions and the average amount invested in these stocks was $1842 million. That figure was $4505 million in ANTM’s case. The TJX Companies, Inc. (NYSE:TJX) is the most popular stock in this table. On the other hand Dominion Energy Inc. (NYSE:D) is the least popular one with only 37 bullish hedge fund positions. Anthem Inc (NYSE:ANTM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANTM is 61.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on ANTM as the stock returned 16.5% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Elevance Health Inc. (NYSE:ELV)
Follow Elevance Health Inc. (NYSE:ELV)
Disclosure: None. This article was originally published at Insider Monkey.
