Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool in identifying the next stock to invest in.
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Is Anthem Inc (NYSE:ANTM) ready to rally soon? The smart money is reducing their bets on the stock. The number of bullish hedge fund positions was trimmed by 5 recently. Anthem Inc (NYSE:ANTM) was in 55 hedge funds’ portfolios at the end of the third quarter of 2015. There were 60 hedge funds in our database with Anthem Inc (NYSE:ANTM) holdings at the end of the previous quarter. At the end of this article, we will also compare Anthem Inc (NYSE:ANTM) to other stocks including Public Storage (NYSE:PSA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), and LIBERTY GLOBAL PLC (NASDAQ:LBTYK) to get a better sense of its popularity.
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In today’s marketplace there are plenty of signals market participants use to appraise stocks. Some of the most underrated signals are hedge fund and insider trading sentiment. Experts at hedge fund tracking site Insider Monkey have shown that, historically, those who follow the top picks of the best fund managers can outperform the market by a very impressive margin (see the details here).
Now, let’s check out the new action regarding Anthem Inc (NYSE:ANTM).
How have hedgies been trading Anthem Inc (NYSE:ANTM)?
Heading into Q4, a total of 55 of the hedge funds tracked by Insider Monkey were long on this stock, a decline of 8% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Andreas Halvorsen’s Viking Global had the largest position in Anthem Inc (NYSE:ANTM), worth close to $827.9 million, corresponding to 3.2% of its total 13F portfolio. Sitting at the No. 2 spot is Glenview Capital, managed by Larry Robbins, which held a $595.1 million position; the fund has 3% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Cliff Asness’ AQR Capital Management, Donald Yacktman’s Yacktman Asset Management and Jim Simons’ Renaissance Technologies.
Since Anthem Inc (NYSE:ANTM) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that slashed their positions entirely in the third quarter. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management dumped the biggest investment of all the hedgies watched by Insider Monkey, totaling about $87.2 million in stock. Christopher MedlockáJames’ fund, Partner Fund Management, also sold off its stock, about $84.3 million worth. These moves are interesting, as aggregate hedge fund interest fell by 5 funds in the third quarter.
Let’s also take a look at hedge fund activity in other stocks similar to Anthem Inc (NYSE:ANTM). These stocks are Public Storage (NYSE:PSA), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), LIBERTY GLOBAL PLC (NASDAQ:LBTYK), and Delta Air Lines, Inc. (NYSE:DAL). This group of stocks’ market caps match Anthem Inc (NYSE:ANTM)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSA | 21 | 653333 | -1 |
| QQQ | 23 | 852206 | 2 |
| LBTYK | 89 | 8277984 | 1 |
| DAL | 109 | 7318759 | -5 |
As you can see these stocks had an average of 61 hedge funds with bullish positions and the average amount invested in these stocks was $4.28 billion. Delta Air Lines, Inc. (NYSE:DAL) is by far the most popular stock in this table with 109 funds bullish on it at the end of September. On the other hand Public Storage (NYSE:PSA) is the least popular one. Anthem Inc (NYSE:ANTM) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Delta Air Lines, Inc. (NYSE:DAL) might be a better candidate to consider a long position.
