Is CTRE A Good Stock To Buy Now?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded CareTrust REIT Inc (NASDAQ:CTRE) based on those filings.

Is CTRE a good stock to buy now? CareTrust REIT Inc (NASDAQ:CTRE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of September. Our calculations also showed that CTRE 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NanoString Technologies Inc (NASDAQ:NSTG), Turquoise Hill Resources Ltd (NYSE:TRQ), and Range Resources Corp. (NYSE:RRC) to gather more data points.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are numerous gauges stock traders have at their disposal to size up their holdings. A couple of the best gauges are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the S&P 500 by a very impressive amount (see the details here).

Joel Greenblatt of Gotham Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now let’s take a glance at the fresh hedge fund action surrounding CareTrust REIT Inc (NASDAQ:CTRE).

Do Hedge Funds Think CTRE Is A Good Stock To Buy Now?

At third quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CTRE over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Millennium Management was the largest shareholder of CareTrust REIT Inc (NASDAQ:CTRE), with a stake worth $41.1 million reported as of the end of September. Trailing Millennium Management was D E Shaw, which amassed a stake valued at $24.4 million. Balyasny Asset Management, Renaissance Technologies, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to CareTrust REIT Inc (NASDAQ:CTRE), around 0.79% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.39 percent of its 13F equity portfolio to CTRE.

Seeing as CareTrust REIT Inc (NASDAQ:CTRE) has faced falling interest from hedge fund managers, it’s safe to say that there is a sect of hedge funds who were dropping their entire stakes in the third quarter. It’s worth mentioning that Matthew Hulsizer’s PEAK6 Capital Management sold off the largest stake of all the hedgies tracked by Insider Monkey, worth close to $0.3 million in stock. Chuck Royce’s fund, Royce & Associates, also sold off its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as CareTrust REIT Inc (NASDAQ:CTRE) but similarly valued. These stocks are NanoString Technologies Inc (NASDAQ:NSTG), Turquoise Hill Resources Ltd (NYSE:TRQ), Range Resources Corp. (NYSE:RRC), Genworth Financial Inc (NYSE:GNW), Flagstar Bancorp Inc (NYSE:FBC), TransAlta Corporation (NYSE:TAC), and Atlantic Union Bankshares Corporation (NASDAQ:AUB). This group of stocks’ market caps match CTRE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $129 million in CTRE’s case. Genworth Financial Inc (NYSE:GNW) is the most popular stock in this table. On the other hand Turquoise Hill Resources Ltd (NYSE:TRQ) is the least popular one with only 9 bullish hedge fund positions. CareTrust REIT Inc (NASDAQ:CTRE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CTRE is 50.7. 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 December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on CTRE as the stock returned 24.5% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.