Where Do Hedge Funds Stand On Clover Health Investments, Corp. (CLOV)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Clover Health Investments, Corp. (NASDAQ:CLOV).

Hedge fund interest in Clover Health Investments, Corp. (NASDAQ:CLOV) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that CLOV isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as HUTCHMED (China) Limited (NASDAQ:HCM), The Descartes Systems Group Inc (NASDAQ:DSGX), and Healthcare Trust Of America Inc (NYSE:HTA) to gather more data points.

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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Bart Baum of Ionic Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Now let’s take a glance at the recent hedge fund action surrounding Clover Health Investments, Corp. (NASDAQ:CLOV).

Do Hedge Funds Think CLOV Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in CLOV a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Clover Health Investments, Corp. (NASDAQ:CLOV) was held by Greenoaks Capital, which reported holding $1283.1 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $31.2 million position. Other investors bullish on the company included Ionic Capital Management, Perceptive Advisors, and Millennium Management. In terms of the portfolio weights assigned to each position Greenoaks Capital allocated the biggest weight to Clover Health Investments, Corp. (NASDAQ:CLOV), around 9.66% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, dishing out 2.24 percent of its 13F equity portfolio to CLOV.

Judging by the fact that Clover Health Investments, Corp. (NASDAQ:CLOV) has experienced falling interest from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that decided to sell off their entire stakes last quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth about $37.8 million in stock. Parvinder Thiara’s fund, Athanor Capital, also sold off its stock, about $2.9 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Clover Health Investments, Corp. (NASDAQ:CLOV) but similarly valued. We will take a look at HUTCHMED (China) Limited (NASDAQ:HCM), The Descartes Systems Group Inc (NASDAQ:DSGX), Healthcare Trust Of America Inc (NYSE:HTA), South State Corporation (NASDAQ:SSB), Nordstrom, Inc. (NYSE:JWN), Shell Midstream Partners LP (NYSE:SHLX), and Unum Group (NYSE:UNM). This group of stocks’ market valuations match CLOV’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $242 million. That figure was $1416 million in CLOV’s case. Nordstrom, Inc. (NYSE:JWN) is the most popular stock in this table. On the other hand Shell Midstream Partners LP (NYSE:SHLX) is the least popular one with only 4 bullish hedge fund positions. Clover Health Investments, Corp. (NASDAQ:CLOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLOV is 70.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately CLOV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CLOV were disappointed as the stock returned -43.7% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

Suggested Articles:

• 10 Best Large-cap Stocks To Buy Now
• 15 Best American Stocks to Buy Now
• 16 Best Luxury Resorts in Caribbean in 2021

Disclosure: None. This article was originally published at Insider Monkey.