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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Community Health Systems (NYSE:CYH) based on those filings.
Is CYH stock a buy? Hedge funds were getting more optimistic. The number of long hedge fund positions increased by 4 lately. Community Health Systems (NYSE:CYH) was in 26 hedge funds' portfolios at the end of December. The all time high for this statistic is 59. Our calculations also showed that CYH isn't among the 30 most popular stocks among hedge funds (click for Q4 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. 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 124 percentage points since March 2017 (see the details here).
Paul Singer of Elliott Management
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Do Hedge Funds Think CYH Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in CYH a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Community Health Systems (NYSE:CYH) was held by Shanda Asset Management, which reported holding $108 million worth of stock at the end of December. It was followed by Elliott Investment Management with a $33.4 million position. Other investors bullish on the company included Royce & Associates, Renaissance Technologies, and D E Shaw. In terms of the portfolio weights assigned to each position Shanda Asset Management allocated the biggest weight to Community Health Systems (NYSE:CYH), around 5.86% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, dishing out 2.21 percent of its 13F equity portfolio to CYH.
Consequently, specific money managers have been driving this bullishness. Luminus Management, managed by Jonathan Barrett and Paul Segal, established the most valuable position in Community Health Systems (NYSE:CYH). Luminus Management had $9.5 million invested in the company at the end of the quarter. Frank Fu's CaaS Capital also initiated a $9.1 million position during the quarter. The other funds with brand new CYH positions are Andy Redleaf's Whitebox Advisors, Paul Marshall and Ian Wace's Marshall Wace LLP, and Peter Muller's PDT Partners.
Let's now take a look at hedge fund activity in other stocks similar to Community Health Systems (NYSE:CYH). We will take a look at Lumber Liquidators Holdings Inc (NYSE:LL), ChipMOS Technologies Inc (NASDAQ:IMOS), Kraton Corporation (NYSE:KRA), Armada Hoffler Properties Inc (NYSE:AHH), Enova International Inc (NYSE:ENVA), Establishment Labs Holdings Inc. (NASDAQ:ESTA), and K12 Inc. (NYSE:LRN). All of these stocks' market caps resemble CYH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LL,17,77898,3 IMOS,2,41328,0 KRA,18,74032,-1 AHH,10,44572,-2 ENVA,20,197296,-3 ESTA,14,156825,2 LRN,14,70730,-9 Average,13.6,94669,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $295 million in CYH's case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand ChipMOS Technologies Inc (NASDAQ:IMOS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Community Health Systems (NYSE:CYH) is more popular among hedge funds. Our overall hedge fund sentiment score for CYH is 72.2. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on CYH as the stock returned 37.1% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.