We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of HCA Healthcare Inc (NYSE:HCA) based on that data.
Is HCA Healthcare (HCA) stock a buy or sell? Prominent investors were buying. The number of long hedge fund positions improved by 2 recently. HCA Healthcare Inc (NYSE:HCA) was in 73 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 87. Our calculations also showed that HCA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 71 hedge funds in our database with HCA holdings at the end of September.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Larry Robbins of Glenview Capital
At Insider Monkey we leave no stone unturned when looking for 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 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). With all of this in mind let’s review the new hedge fund action regarding HCA Healthcare Inc (NYSE:HCA).
Do Hedge Funds Think HCA Is A Good Stock To Buy Now?
At Q4’s end, a total of 73 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards HCA over the last 22 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Lyrical Asset Management, managed by Andrew Wellington and Jeff Keswin, holds the most valuable position in HCA Healthcare Inc (NYSE:HCA). Lyrical Asset Management has a $346.1 million position in the stock, comprising 4.8% of its 13F portfolio. The second largest stake is held by Andreas Halvorsen of Viking Global, with a $287.5 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Glenn Greenberg’s Brave Warrior Capital and Larry Robbins’s Glenview Capital. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to HCA Healthcare Inc (NYSE:HCA), around 19.28% of its 13F portfolio. Cryder Capital is also relatively very bullish on the stock, setting aside 12.81 percent of its 13F equity portfolio to HCA.
Now, specific money managers were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, created the biggest position in HCA Healthcare Inc (NYSE:HCA). Viking Global had $287.5 million invested in the company at the end of the quarter. Kevin Molloy’s Iron Triangle Partners also initiated a $46 million position during the quarter. The following funds were also among the new HCA investors: Anand Parekh’s Alyeska Investment Group, Michael Rockefeller and Karl Kroeker’s Woodline Partners, and Nicholas Bagnall’s Te Ahumairangi Investment Management.
Let’s go over hedge fund activity in other stocks similar to HCA Healthcare Inc (NYSE:HCA). We will take a look at Dell Technologies Inc. (NYSE:DELL), Analog Devices, Inc. (NASDAQ:ADI), Equinor ASA (NYSE:EQNR), Moody’s Corporation (NYSE:MCO), Twilio Inc. (NYSE:TWLO), Humana Inc (NYSE:HUM), and Illumina, Inc. (NASDAQ:ILMN). This group of stocks’ market valuations resemble HCA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DELL | 50 | 3909030 | 7 |
| ADI | 58 | 5319785 | 6 |
| EQNR | 18 | 238582 | -2 |
| MCO | 59 | 11352402 | -1 |
| TWLO | 94 | 5011455 | 23 |
| HUM | 59 | 3966420 | -2 |
| ILMN | 45 | 1747647 | 1 |
| Average | 54.7 | 4506474 | 4.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.7 hedge funds with bullish positions and the average amount invested in these stocks was $4506 million. That figure was $3565 million in HCA’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Equinor ASA (NYSE:EQNR) is the least popular one with only 18 bullish hedge fund positions. HCA Healthcare Inc (NYSE:HCA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HCA is 68.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on HCA as the stock returned 15.2% since the end of Q4 (through 3/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Hca Healthcare Inc. (NYSE:HCA)
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Disclosure: None. This article was originally published at Insider Monkey.
