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 Anthem Inc (NYSE:ANTM)? The smart money sentiment can provide an answer to this question.
Is Anthem Inc (NYSE:ANTM) a buy, sell, or hold? Money managers are getting more bullish. The number of long hedge fund bets advanced by 12 in recent months. Our calculations also showed that ANTM isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to the beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s review the fresh hedge fund action surrounding Anthem Inc (NYSE:ANTM).
How are hedge funds trading Anthem Inc (NYSE:ANTM)?
At Q3’s end, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from the previous quarter. The graph below displays the number of hedge funds with a bullish position in ANTM over the last 13 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Viking Global was the largest shareholder of Anthem Inc (NYSE:ANTM), with a stake worth $1310.7 million reported as of the end of September. Trailing Viking Global was AQR Capital Management, which amassed a stake valued at $693.1 million. Orbis Investment Management, Iridian Asset Management, and Glenview Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers have jumped into Anthem Inc (NYSE:ANTM) headfirst. Suvretta Capital Management, managed by Aaron Cowen, established the most valuable position in Anthem Inc (NYSE:ANTM). Suvretta Capital Management had $218.6 million invested in the company at the end of the quarter. Philip Hempleman’s Ardsley Partners also made a $46.6 million investment in the stock during the quarter. The following funds were also among the new ANTM investors: Paul Reeder and Edward Shapiro’s PAR Capital Management, Stephen J. Errico’s Locust Wood Capital Advisers, and Clint Carlson’s Carlson Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Anthem Inc (NYSE:ANTM) but similarly valued. We will take a look at Biogen Inc. (NASDAQ:BIIB), Itau Unibanco Holding SA (NYSE:ITUB), Becton, Dickinson and Company (NYSE:BDX), and The TJX Companies, Inc. (NYSE:TJX). This group of stocks’ market caps resemble ANTM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIIB | 56 | 3434463 | 3 |
| ITUB | 15 | 669277 | 0 |
| BDX | 41 | 1244633 | 7 |
| TJX | 49 | 3254193 | 10 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.25 hedge funds with bullish positions and the average amount invested in these stocks was $2151 million. That figure was $6270 million in ANTM’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Itau Unibanco Holding SA (NYSE:ITUB) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Anthem Inc (NYSE:ANTM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
