Is Chemed Corporation (CHE) Going to Burn These Hedge Funds?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Chemed Corporation (NYSE:CHE) was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. CHE investors should be aware of a decrease in hedge fund interest in recent months. There were 17 hedge funds in our database with CHE positions at the end of the previous quarter. At the end of this article we will also compare CHE to other stocks including Clear Channel Outdoor Holdings, Inc. (NYSE:CCO), WebMD Health Corp. (NASDAQ:WBMD), and Cepheid (NASDAQ:CPHD) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with Chemed Corporation (NYSE:CHE)?

Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a 12% dip from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CHE over the last 5 quarters, which has generally been within a narrow range. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, GAMCO Investors, led by Mario Gabelli, holds the largest position in Chemed Corporation (NYSE:CHE). GAMCO Investors has an $89.7 million position in the stock. Coming in second is Fisher Asset Management, led by Ken Fisher, holding a $77.5 million position. Other professional money managers that hold long positions encompass Amy Minella’s Cardinal Capital, Jim Simons’ Renaissance Technologies, and Joel Greenblatt’s Gotham Asset Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.