As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Anthem Inc (NYSE:ANTM).
Anthem Inc (NYSE:ANTM) shareholders have witnessed an increase in enthusiasm from smart money lately. Anthem Inc (NYSE:ANTM) was in 67 hedge funds’ portfolios at the end of June. The all time high for this statistic is 73. Our calculations also showed that ANTM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
William Gray of Orbis Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. We go through lists like the 10 best EV stocks 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. Now we’re going to go over the latest hedge fund action encompassing Anthem Inc (NYSE:ANTM).
Do Hedge Funds Think ANTM Is A Good Stock To Buy Now?
At Q2’s end, a total of 67 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 69 hedge funds with a bullish position in ANTM a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Boykin Curry’s Eagle Capital Management has the largest position in Anthem Inc (NYSE:ANTM), worth close to $1.0025 billion, comprising 2.9% of its total 13F portfolio. Coming in second is Orbis Investment Management, managed by William B. Gray, which holds a $819.2 million position; 5.2% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Glenn Greenberg’s Brave Warrior Capital, Cliff Asness’s AQR Capital Management and Farallon Capital. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Anthem Inc (NYSE:ANTM), around 15.01% of its 13F portfolio. MIC Capital Partners is also relatively very bullish on the stock, dishing out 6.16 percent of its 13F equity portfolio to ANTM.
As aggregate interest increased, key hedge funds have jumped into Anthem Inc (NYSE:ANTM) headfirst. Harbor Spring Capital, managed by Amit Nitin Doshi, created the biggest position in Anthem Inc (NYSE:ANTM). Harbor Spring Capital had $26.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $9.5 million position during the quarter. The other funds with brand new ANTM positions are McKinley Capital Management, Paul Tudor Jones’s Tudor Investment Corp, and Andrew Weiss’s Weiss Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Anthem Inc (NYSE:ANTM) but similarly valued. These stocks are Lam Research Corporation (NASDAQ:LRCX), Airbnb, Inc. (NASDAQ:ABNB), British American Tobacco plc (NYSE:BTI), Infosys Limited (NYSE:INFY), Booking Holdings Inc. (NASDAQ:BKNG), PetroChina Company Limited (NYSE:PTR), and BP plc (NYSE:BP). This group of stocks’ market valuations resemble ANTM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LRCX | 58 | 3719258 | 4 |
| ABNB | 58 | 2711062 | 6 |
| BTI | 12 | 1011787 | -2 |
| INFY | 22 | 2158547 | -4 |
| BKNG | 100 | 6943746 | -3 |
| PTR | 8 | 85856 | 0 |
| BP | 30 | 1080625 | 1 |
| Average | 41.1 | 2530126 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.1 hedge funds with bullish positions and the average amount invested in these stocks was $2530 million. That figure was $4838 million in ANTM’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 8 bullish hedge fund positions. Anthem Inc (NYSE:ANTM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANTM is 69.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on ANTM as the stock returned 14.3% since the end of Q2 (through 10/29) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
