The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Healthcare Services Group, Inc. (NASDAQ:HCSG).
Is Healthcare Services Group, Inc. (NASDAQ:HCSG) a healthy stock for your portfolio? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund bets increased by 2 recently. Our calculations also showed that HCSG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). HCSG was in 20 hedge funds' portfolios at the end of March. There were 18 hedge funds in our database with HCSG holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of indicators stock traders can use to value stocks. A couple of the less known indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce their index-focused peers by a healthy margin (see the details here).
[caption id="attachment_193030" align="aligncenter" width="394"] Tom Gayner of Markel Gayner Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's view the recent hedge fund action encompassing Healthcare Services Group, Inc. (NASDAQ:HCSG).
Hedge fund activity in Healthcare Services Group, Inc. (NASDAQ:HCSG)
Heading into the second quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the fourth quarter of 2019. On the other hand, there were a total of 21 hedge funds with a bullish position in HCSG a year ago. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Tom Gayner's Markel Gayner Asset Management has the number one position in Healthcare Services Group, Inc. (NASDAQ:HCSG), worth close to $16.7 million, corresponding to 0.3% of its total 13F portfolio. Coming in second is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $13.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions contain D. E. Shaw's D E Shaw, Francois Rochon's Giverny Capital and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to Healthcare Services Group, Inc. (NASDAQ:HCSG), around 3.66% of its 13F portfolio. Giverny Capital is also relatively very bullish on the stock, dishing out 0.9 percent of its 13F equity portfolio to HCSG.
Consequently, key hedge funds were leading the bulls' herd. Rutabaga Capital Management, managed by Peter Schliemann, created the most valuable position in Healthcare Services Group, Inc. (NASDAQ:HCSG). Rutabaga Capital Management had $6.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also made a $3.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Coe's Intrinsic Edge Capital, Steve Cohen's Point72 Asset Management, and Benjamin A. Smith's Laurion Capital Management.
Let's go over hedge fund activity in other stocks similar to Healthcare Services Group, Inc. (NASDAQ:HCSG). We will take a look at Ballard Power Systems Inc. (NASDAQ:BLDP), KB Home (NYSE:KBH), Applied Industrial Technologies Inc (NYSE:AIT), and National Storage Affiliates Trust (NYSE:NSA). All of these stocks' market caps are closest to HCSG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLDP,10,21232,4 KBH,25,291267,-4 AIT,14,35993,-8 NSA,18,77143,7 Average,16.75,106409,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $87 million in HCSG's case. KB Home (NYSE:KBH) is the most popular stock in this table. On the other hand Ballard Power Systems Inc. (NASDAQ:BLDP) is the least popular one with only 10 bullish hedge fund positions. Healthcare Services Group, Inc. (NASDAQ:HCSG) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately HCSG wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HCSG were disappointed as the stock returned 3.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.