WebMD Health Corp. (NASDAQ:WBMD)’s stock is over 5% in the red today after the company announced the pricing of its private placement of $300 million aggregate principal amount of 2⅝% Convertible Notes due 2023. The notes are convertible into shares of WebMD stock based on an initial conversion rate of 11.4845 shares of WebMD stock for every $1,000 principal amount of notes, which is equal to an initial conversion price of around $87.07 per share. Holders of the notes might require WebMD to repurchase the notes upon the occurrence of a fundamental change at a price equal to 100% of the principal amount of the notes being repurchased, plus any accrued and unpaid interest. WebMD intends to use the proceeds for general corporate purposes.
In today’s marketplace there are many indicators investors can use to analyze publicly traded companies. Two of the most underrated indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top investment managers can trounce the S&P 500 by a healthy amount (see the details here).
WebMD Health Corp. (NASDAQ:WBMD) was in 26 hedge funds’ portfolios at the end of March. WBMD shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 22 hedge funds in our database with WBMD positions at the end of the previous quarter. At the end of this article we will also compare WBMD to other stocks including Stantec Inc. (USA) (NYSE:STN), Boston Beer Co Inc (NYSE:SAM), and Univar Inc (NYSE:UNVR) to get a better sense of its popularity.
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According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael Lowenstein’s Kensico Capital has the biggest position in WebMD Health Corp. (NASDAQ:WBMD), worth close to $319.7 million, corresponding to 6.4% of its total 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which holds a $53.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Howard Marks’s Oaktree Capital Management, D. E. Shaw’s D E Shaw and Howard Marks’s Oaktree Capital Management.
On the next page, we are going to take a look at some funds that initiated stakes in WebMD Health Corp during the first three months of 2016.
As aggregate interest increased, some big names have jumped into WebMD Health Corp. (NASDAQ:WBMD) headfirst. Steelhead Partners, managed by Michael Johnston, established the biggest position in WebMD Health Corp. (NASDAQ:WBMD). Steelhead Partners had $35.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $33.6 million investment in the stock during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Nick Niell’s Arrowgrass Capital Partners, and D. E. Shaw’s D E Shaw.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as WebMD Health Corp. (NASDAQ:WBMD) but similarly valued. These stocks are Stantec Inc. (USA) (NYSE:STN), Boston Beer Co Inc (NYSE:SAM), Univar Inc (NYSE:UNVR), and Manchester United PLC (NYSE:MANU). This group of stocks’ market valuations resemble WBMD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STN | 10 | 41063 | 3 |
| SAM | 17 | 281944 | -5 |
| UNVR | 12 | 175044 | 0 |
| MANU | 9 | 94419 | 2 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $148 million. That figure was $558 million in WBMD’s case. Boston Beer Co Inc (NYSE:SAM) is the most popular stock in this table. On the other hand, Manchester United PLC (NYSE:MANU) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks WebMD Health Corp. (NASDAQ:WBMD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
