LifePoint Health Inc (LPNT): Are Hedge Funds Right About This Stock?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

LifePoint Health Inc (NASDAQ:LPNT) was in 16 hedge funds’ portfolios at the end of September. LPNT investors should be aware of a decrease in hedge fund interest in recent months. There were 22 hedge funds in our database with LPNT holdings at the end of the previous quarter. 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 Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), Nabors Industries Ltd. (NYSE:NBR), and Avista Corp (NYSE:AVA) to gather more data points.

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 does the smart money think about LifePoint Health Inc (NASDAQ:LPNT)?

At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 27% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in LPNT over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the largest position in LifePoint Health Inc (NASDAQ:LPNT), worth close to $111.6 million. On Diamond Hill Capital’s heels is North Tide Capital, led by Conan Laughlin, holding a $29.6 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Larry Robbins’ Glenview Capital, Jeffrey Jacobowitz’s Simcoe Capital Management and Cliff Asness’ AQR Capital 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.

Since LifePoint Health Inc (NASDAQ:LPNT) has encountered declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds that slashed their entire stakes in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of all the investors monitored by Insider Monkey, comprising an estimated $16.4 million in stock. Anders Hallberg and Carl Bennet’s fund, HealthInvest Partners AB, also dropped its stock, about $12.1 million worth.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as LifePoint Health Inc (NASDAQ:LPNT) but similarly valued. We will take a look at Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), Nabors Industries Ltd. (NYSE:NBR), Avista Corp (NYSE:AVA), and China Biologic Products Inc (NASDAQ:CBPO). This group of stocks’ market valuations match LPNT’s market valuation.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $192 million in LPNT’s case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand Avista Corp (NYSE:AVA) is the least popular one with only 9 bullish hedge fund positions. LifePoint Health Inc (NASDAQ:LPNT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SBGI might be a better candidate to consider taking a long position in.

Disclosure: None