Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by nearly 10 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of New Senior Investment Group Inc (NYSE:SNR).
Hedge fund interest in New Senior Investment Group Inc (NYSE:SNR) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Cohu, Inc. (NASDAQ:COHU), Whitestone REIT (NYSE:WSR), and Wanda Sports Group Company Limited (NASDAQ:WSG) to gather more data points. Our calculations also showed that SNR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Leon Cooperman of Omega Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the latest hedge fund action regarding New Senior Investment Group Inc (NYSE:SNR).
What have hedge funds been doing with New Senior Investment Group Inc (NYSE:SNR)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in SNR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in New Senior Investment Group Inc (NYSE:SNR), which was worth $43.1 million at the end of the third quarter. On the second spot was Omega Advisors which amassed $28.4 million worth of shares. Citadel Investment Group, GLG Partners, and Proxima Capital Management 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 Omega Advisors allocated the biggest weight to New Senior Investment Group Inc (NYSE:SNR), around 1.69% of its 13F portfolio. Proxima Capital Management is also relatively very bullish on the stock, designating 1.33 percent of its 13F equity portfolio to SNR.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as New Senior Investment Group Inc (NYSE:SNR) but similarly valued. We will take a look at Cohu, Inc. (NASDAQ:COHU), Whitestone REIT (NYSE:WSR), Wanda Sports Group Company Limited (NASDAQ:WSG), and The First Bancshares, Inc. (NASDAQ:FBMS). All of these stocks’ market caps are closest to SNR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COHU | 11 | 46391 | 1 |
| WSR | 1 | 18218 | -3 |
| WSG | 5 | 13083 | 5 |
| FBMS | 8 | 32584 | 1 |
| Average | 6.25 | 27569 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $78 million in SNR’s case. Cohu, Inc. (NASDAQ:COHU) is the most popular stock in this table. On the other hand Whitestone REIT (NYSE:WSR) is the least popular one with only 1 bullish hedge fund positions. New Senior Investment Group Inc (NYSE:SNR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SNR as the stock returned 17.5% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
