Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s analyze whether LTC Properties Inc (NYSE:LTC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
LTC Properties Inc (NYSE:LTC) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of December. At the end of this article we will also compare LTC to other stocks including Cavco Industries, Inc. (NASDAQ:CVCO), NBT Bancorp Inc. (NASDAQ:NBTB), and Northwest Bancshares, Inc. (NASDAQ:NWBI) to get a better sense of its popularity.
At the moment there are plenty of indicators stock traders have at their disposal to assess publicly traded companies. Two of the best indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the S&P 500 by a very impressive amount (see the details here).
Kamran Moghtaderi of Eversept Partners
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding LTC Properties Inc (NYSE:LTC).
Hedge fund activity in LTC Properties Inc (NYSE:LTC)
Heading into the first quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LTC over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Winton Capital Management held the most valuable stake in LTC Properties Inc (NYSE:LTC), which was worth $13.5 million at the end of the third quarter. On the second spot was Balyasny Asset Management which amassed $10.3 million worth of shares. Citadel Investment Group, Eversept Partners, and Two Sigma Advisors 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 Eversept Partners allocated the biggest weight to LTC Properties Inc (NYSE:LTC), around 0.51% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.19 percent of its 13F equity portfolio to LTC.
Due to the fact that LTC Properties Inc (NYSE:LTC) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers that decided to sell off their full holdings by the end of the third quarter. Interestingly, Renaissance Technologies cut the largest stake of the 750 funds followed by Insider Monkey, valued at an estimated $2.4 million in stock, and Roger Ibbotson’s Zebra Capital Management was right behind this move, as the fund said goodbye to about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to LTC Properties Inc (NYSE:LTC). These stocks are Cavco Industries, Inc. (NASDAQ:CVCO), NBT Bancorp Inc. (NASDAQ:NBTB), Northwest Bancshares, Inc. (NASDAQ:NWBI), and American Woodmark Corporation (NASDAQ:AMWD). This group of stocks’ market valuations are closest to LTC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVCO | 20 | 170519 | -1 |
| NBTB | 7 | 13039 | 1 |
| NWBI | 19 | 66676 | -1 |
| AMWD | 17 | 50799 | 2 |
| Average | 15.75 | 75258 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $37 million in LTC’s case. Cavco Industries, Inc. (NASDAQ:CVCO) is the most popular stock in this table. On the other hand NBT Bancorp Inc. (NASDAQ:NBTB) is the least popular one with only 7 bullish hedge fund positions. LTC Properties Inc (NYSE:LTC) 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. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately LTC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); LTC investors were disappointed as the stock returned -32.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
