Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Cano Health Inc. (NYSE:CANO) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Cano Health Inc. (NYSE:CANO) a good investment today? Hedge funds were buying. The number of bullish hedge fund positions advanced by 37 recently. Cano Health Inc. (NYSE:CANO) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that CANO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a gander at the recent hedge fund action surrounding Cano Health Inc. (NYSE:CANO).
Do Hedge Funds Think CANO Is A Good Stock To Buy Now?
At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 37 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CANO over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Dan Loeb’s Third Point has the largest position in Cano Health Inc. (NYSE:CANO) , worth close to $140.5 million, comprising 0.8% of its total 13F portfolio. On Third Point’s heels is Suvretta Capital Management, led by Aaron Cowen, holding a $106.8 million position; 1.8% of its 13F portfolio is allocated to the stock. Other peers that are bullish comprise Lee Ainslie’s Maverick Capital, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Cobalt Capital Management allocated the biggest weight to Cano Health Inc. (NYSE:CANO) , around 3.2% of its 13F portfolio. Falcon Edge Capital is also relatively very bullish on the stock, dishing out 2.24 percent of its 13F equity portfolio to CANO.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, assembled the largest position in Cano Health Inc. (NYSE:CANO) . Healthcor Management LP had $34.9 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $30 million position during the quarter. The following funds were also among the new CANO investors: Efrem Kamen’s Pura Vida Investments, Renaissance Technologies, and Joseph Samuels’s Islet Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cano Health Inc. (NYSE:CANO) but similarly valued. These stocks are Compass Minerals International, Inc. (NYSE:CMP), Sonic Automotive Inc (NYSE:SAH), Gray Television, Inc. (NYSE:GTN), NanoString Technologies Inc (NASDAQ:NSTG), Liberty Oilfield Services Inc. (NYSE:LBRT), Columbia Property Trust Inc (NYSE:CXP), and Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY). This group of stocks’ market values are closest to CANO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMP | 14 | 80089 | -1 |
| SAH | 26 | 156146 | 6 |
| GTN | 20 | 74130 | 0 |
| NSTG | 26 | 454375 | 1 |
| LBRT | 7 | 17020 | -13 |
| CXP | 20 | 307842 | 2 |
| HRMY | 19 | 303691 | 4 |
| Average | 18.9 | 199042 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $199 million. That figure was $873 million in CANO’s case. Sonic Automotive Inc (NYSE:SAH) is the most popular stock in this table. On the other hand Liberty Oilfield Services Inc. (NYSE:LBRT) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Cano Health Inc. (NYSE:CANO) is more popular among hedge funds. Our overall hedge fund sentiment score for CANO is 90. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, CANO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CANO were disappointed as the stock returned -54.4% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
