We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of National HealthCare Corporation (NYSE:NHC) based on that data.
Is National HealthCare Corporation (NYSE:NHC) a first-rate investment right now? Hedge funds were in a pessimistic mood. The number of long hedge fund bets shrunk by 3 in recent months. National HealthCare Corporation (NYSE:NHC) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 13. Our calculations also showed that NHC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 9 hedge funds in our database with NHC positions at the end of the fourth quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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 fresh hedge fund action surrounding National HealthCare Corporation (NYSE:NHC).
Do Hedge Funds Think NHC Is A Good Stock To Buy Now?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in NHC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in National HealthCare Corporation (NYSE:NHC) was held by Renaissance Technologies, which reported holding $48.4 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $4.7 million position. Other investors bullish on the company included AQR Capital Management, Two Sigma Advisors, and Engineers Gate Manager. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to National HealthCare Corporation (NYSE:NHC), around 0.06% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to NHC.
Judging by the fact that National HealthCare Corporation (NYSE:NHC) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds who were dropping their full holdings heading into Q2. It’s worth mentioning that David Harding’s Winton Capital Management dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $1.2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $1 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as National HealthCare Corporation (NYSE:NHC) but similarly valued. These stocks are Ribbon Communications Inc. (NASDAQ:RBBN), Oasis Petroleum Inc. (NYSE:OAS), Orion Engineered Carbons SA (NYSE:OEC), Fortuna Silver Mines Inc. (NYSE:FSM), Bolt Biotherapeutics, Inc. (NASDAQ:BOLT), National Research Corporation (NASDAQ:NRC), and Opera Limited (NASDAQ:OPRA). This group of stocks’ market caps are similar to NHC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RBBN | 15 | 51556 | 5 |
| OAS | 17 | 173658 | 3 |
| OEC | 19 | 186263 | 0 |
| FSM | 12 | 19878 | 1 |
| BOLT | 23 | 423044 | 23 |
| NRC | 9 | 31401 | -3 |
| OPRA | 5 | 7933 | 2 |
| Average | 14.3 | 127676 | 4.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.3 hedge funds with bullish positions and the average amount invested in these stocks was $128 million. That figure was $57 million in NHC’s case. Bolt Biotherapeutics, Inc. (NASDAQ:BOLT) is the most popular stock in this table. On the other hand Opera Limited (NASDAQ:OPRA) is the least popular one with only 5 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. Our overall hedge fund sentiment score for NHC is 18.6. 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 negative signal and 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately NHC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NHC investors were disappointed as the stock returned -10.2% since the end of March (through 6/25) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
