With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Welltower Inc. (NYSE:WELL).
Is Welltower Inc. (NYSE:WELL) worth your attention right now? Investors who are in the know were getting less optimistic. The number of bullish hedge fund bets fell by 5 lately. Welltower Inc. (NYSE:WELL) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 27. Our calculations also showed that WELL isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Phillip Gross of Adage Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. With all of this in mind let’s review the new hedge fund action regarding Welltower Inc. (NYSE:WELL).
Do Hedge Funds Think WELL Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in WELL a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Zimmer Partners was the largest shareholder of Welltower Inc. (NYSE:WELL), with a stake worth $78.8 million reported as of the end of March. Trailing Zimmer Partners was Healthcor Management LP, which amassed a stake valued at $66.4 million. Camber Capital Management, Citadel Investment Group, and Adage Capital Management 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 Healthcor Management LP allocated the biggest weight to Welltower Inc. (NYSE:WELL), around 2.35% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, designating 1.99 percent of its 13F equity portfolio to WELL.
Seeing as Welltower Inc. (NYSE:WELL) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few funds that slashed their positions entirely in the first quarter. At the top of the heap, Ricky Sandler’s Eminence Capital cut the biggest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $93.7 million in stock, and Doug Silverman and Alexander Klabin’s Senator Investment Group was right behind this move, as the fund dumped about $48.5 million worth. These moves are interesting, as aggregate hedge fund interest fell by 5 funds in the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Welltower Inc. (NYSE:WELL) but similarly valued. We will take a look at Eversource Energy (NYSE:ES), Sun Life Financial Inc. (NYSE:SLF), State Street Corporation (NYSE:STT), WEC Energy Group, Inc. (NYSE:WEC), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), AMETEK, Inc. (NYSE:AME), and ANSYS, Inc. (NASDAQ:ANSS). All of these stocks’ market caps are closest to WELL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ES | 24 | 421208 | 0 |
| SLF | 17 | 139250 | -2 |
| STT | 32 | 866316 | 1 |
| WEC | 17 | 184448 | -8 |
| WLTW | 66 | 5189453 | 8 |
| AME | 32 | 909796 | 1 |
| ANSS | 33 | 1503462 | -7 |
| Average | 31.6 | 1316276 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $1316 million. That figure was $327 million in WELL’s case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand Sun Life Financial Inc. (NYSE:SLF) is the least popular one with only 17 bullish hedge fund positions. Welltower Inc. (NYSE:WELL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WELL is 27.4. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on WELL as the stock returned 26.2% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.
Follow Welltower Inc. (NYSE:WELL)
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Disclosure: None. This article was originally published at Insider Monkey.
