What This Metric Says About Anthem Inc (ANTM)?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we will go over the recent hedge fund activity surrounding Anthem Inc (NYSE:ANTM).

Anthem Inc (NYSE:ANTM) was included in the 13F portfolios of 54 investors tracked by us at the end of September. ANTM investors should be aware of a decrease in activity from the world’s largest hedge funds, as there had been 58 investors with ANTM positions at the end of the previous quarter. At the end of this article we will also compare ANTM to other stocks, including American Electric Power Company, Inc. (NYSE:AEP), Carnival Corporation (NYSE:CCL), and Crown Castle International Corp. (NYSE:CCI), to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, let’s review the key action encompassing Anthem Inc (NYSE:ANTM).

How are hedge funds trading Anthem Inc (NYSE:ANTM)?

A total of 54 of the hedge funds tracked by Insider Monkey were long Anthem heading into the fourth quarter, down by 7% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Glenview Capital, managed by Larry Robbins, holds the largest position in Anthem Inc (NYSE:ANTM). Glenview Capital has a $701.4 million position in the stock, comprising 5% of its 13F portfolio. Coming in second is AQR Capital Management, led by Cliff Asness, holding a $330.1 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism contain William B. Gray’s Orbis Investment Management, Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.

Since Anthem Inc (NYSE:ANTM) has faced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds who sold off their entire stakes by the end of the third quarter. Intriguingly, First Eagle Investment Management dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at close to $306.2 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund said goodbye to about $30.1 million worth of shares.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Anthem Inc (NYSE:ANTM) but similarly valued. These stocks are American Electric Power Company, Inc. (NYSE:AEP), Carnival Corporation (NYSE:CCL), Crown Castle International Corp. (NYSE:CCI), and Canadian Natural Resource Ltd (USA) (NYSE:CNQ). This group of stocks’ market values match ANTM’s market value.

As you can see these stocks had an average of 31 funds with bullish positions and the average amount invested in these stocks was $1.08 billion, which is lower than the $2.65 billion in ANTM’s case. Crown Castle International Corp. (NYSE:CCI) is the most popular stock in this table, while Canadian Natural Resource Ltd (USA) (NYSE:CNQ) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Anthem Inc (NYSE:ANTM) 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.