Is Community Healthcare Trust Inc (NYSE:CHCT) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Community Healthcare Trust Inc shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article we will also compare CHCT to other stocks, including JG Wentworth Co (NYSE:JGW), API Technologies Corp (NASDAQ:ATNY), and Performant Financial Corp (NASDAQ:PFMT) to get a better sense of its popularity.
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Follow Community Healthcare Trust Inc (NYSE:CHCT)
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With all of this in mind, let’s take a glance at the fresh action regarding Community Healthcare Trust Inc (NYSE:CHCT).
How have hedgies been trading Community Healthcare Trust Inc (NYSE:CHCT)?
Heading into Q4, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Dov Gertzulin’s DG Capital Management has the biggest position in Community Healthcare Trust Inc (NYSE:CHCT), worth close to $10.7 million, accounting for 12.5% of its total 13F portfolio. Sitting at the No. 2 spot is Anton Schutz of Mendon Capital Advisors, with a $3.2 million stake; 0.9% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism include David M. Knott’s Dorset Management and Israel Englander’s Millennium Management.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: BHR Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case, because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Mendon Capital Advisors).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Community Healthcare Trust Inc (NYSE:CHCT) but similarly valued. We will take a look at JG Wentworth Co (NYSE:JGW), API Technologies Corp (NASDAQ:ATNY), Performant Financial Corp (NASDAQ:PFMT), and DryShips Inc. (NASDAQ:DRYS). This group of stocks’ market caps match CHCT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JGW | 4 | 22279 | -4 |
| ATNY | 5 | 25565 | 0 |
| PFMT | 11 | 16411 | -1 |
| DRYS | 9 | 3612 | 1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $15 million in CHCT’s case. Performant Financial Corp (NASDAQ:PFMT) is the most popular stock in this table. On the other hand JG Wentworth Co (NYSE:JGW) is the least popular one with only 4 bullish hedge fund positions, exactly the number in the case of Community Healthcare Trust Inc (NYSE:CHCT). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.