The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors endured a torrid quarter, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Select Medical Holdings Corporation (NYSE:SEM).
Select Medical Holdings Corporation (NYSE:SEM) investors should pay attention to a decrease in hedge fund interest of late. Our calculations also showed that SEM isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to review the recent hedge fund action regarding Select Medical Holdings Corporation (NYSE:SEM).
What have hedge funds been doing with Select Medical Holdings Corporation (NYSE:SEM)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SEM over the last 13 quarters. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Select Medical Holdings Corporation (NYSE:SEM). Fisher Asset Management has a $78.4 million position in the stock, comprising 0.1% of its 13F portfolio. On Fisher Asset Management's heels is Steve Cohen of Point72 Asset Management, with a $31.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain James E. Flynn's Deerfield Management, Samuel Isaly's OrbiMed Advisors and Paul Reeder and Edward Shapiro's PAR Capital Management.
Since Select Medical Holdings Corporation (NYSE:SEM) has experienced bearish sentiment from the smart money, it's safe to say that there is a sect of hedgies that elected to cut their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the largest investment of the "upper crust" of funds followed by Insider Monkey, valued at close to $2 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also cut its stock, about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Select Medical Holdings Corporation (NYSE:SEM) but similarly valued. These stocks are Zuora, Inc. (NYSE:ZUO), SeaDrill Limited (NYSE:SDRL), Brooks Automation, Inc. (NASDAQ:BRKS), and DDR Corp (NYSE:DDR). All of these stocks' market caps resemble SEM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZUO,15,94438,0 SDRL,24,837744,20 BRKS,12,139987,2 DDR,12,136063,-3 Average,15.75,302058,4.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $302 million. That figure was $196 million in SEM's case. SeaDrill Limited (NYSE:SDRL) is the most popular stock in this table. On the other hand Brooks Automation, Inc. (NASDAQ:BRKS) is the least popular one with only 12 bullish hedge fund positions. Select Medical Holdings Corporation (NYSE:SEM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard SDRL might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.