We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (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. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of National HealthCare Corporation (NYSE:NHC) based on that data.
National HealthCare Corporation (NYSE:NHC) investors should be aware of an increase in enthusiasm from smart money recently. NHC was in 11 hedge funds’ portfolios at the end of December. There were 8 hedge funds in our database with NHC positions at the end of the previous quarter. Our calculations also showed that NHC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Matthew Hulsizer of PEAK6 Capital
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now let’s take a look at the key hedge fund action encompassing National HealthCare Corporation (NYSE:NHC).
What does smart money think about National HealthCare Corporation (NYSE:NHC)?
At the end of the fourth quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in NHC over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in National HealthCare Corporation (NYSE:NHC) was held by Renaissance Technologies, which reported holding $57.7 million worth of stock at the end of September. It was followed by AQR Capital Management with a $2.2 million position. Other investors bullish on the company included Winton Capital Management, Arrowstreet Capital, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to National HealthCare Corporation (NYSE:NHC), around 0.43% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to NHC.
As industrywide interest jumped, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in National HealthCare Corporation (NYSE:NHC). Arrowstreet Capital had $1.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.7 million position during the quarter. The other funds with brand new NHC positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Matthew Hulsizer’s PEAK6 Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as National HealthCare Corporation (NYSE:NHC) but similarly valued. These stocks are 1st Source Corporation (NASDAQ:SRCE), Aphria Inc. (NYSE:APHA), SunPower Corporation (NASDAQ:SPWR), and Conduent Incorporated (NYSE:CNDT). This group of stocks’ market valuations are similar to NHC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRCE | 10 | 36730 | 1 |
| APHA | 9 | 16714 | 3 |
| SPWR | 15 | 54412 | -2 |
| CNDT | 26 | 421360 | -6 |
| Average | 15 | 132304 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $132 million. That figure was $66 million in NHC’s case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand Aphria Inc. (NYSE:APHA) is the least popular one with only 9 bullish hedge fund positions. National HealthCare Corporation (NYSE:NHC) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately NHC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); NHC investors were disappointed as the stock returned -22.1% 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 10 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.
