In this article you are going to find out whether hedge funds think Hill-Rom Holdings, Inc. (NYSE:HRC) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Hill-Rom Holdings, Inc. (NYSE:HRC) was in 30 hedge funds' portfolios at the end of March. HRC investors should pay attention to an increase in support from the world's most elite money managers of late. There were 27 hedge funds in our database with HRC holdings at the end of the previous quarter. Our calculations also showed that HRC 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are several gauges stock traders employ to analyze stocks. A couple of the less known gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top money managers can trounce their index-focused peers by a healthy amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. With all of this in mind we're going to take a look at the latest hedge fund action encompassing Hill-Rom Holdings, Inc. (NYSE:HRC).
Hedge fund activity in Hill-Rom Holdings, Inc. (NYSE:HRC)
Heading into the second quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HRC over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the most valuable position in Hill-Rom Holdings, Inc. (NYSE:HRC). Select Equity Group has a $389.2 million position in the stock, comprising 2.7% of its 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $86.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish include Israel Englander's Millennium Management, Brian Ashford-Russell and Tim Woolley's Polar Capital and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Select Equity Group allocated the biggest weight to Hill-Rom Holdings, Inc. (NYSE:HRC), around 2.68% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, setting aside 2.26 percent of its 13F equity portfolio to HRC.
Now, key hedge funds were leading the bulls' herd. Bridger Management, managed by Roberto Mignone, created the most outsized position in Hill-Rom Holdings, Inc. (NYSE:HRC). Bridger Management had $19.2 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $16 million position during the quarter. The other funds with brand new HRC positions are Michael Rockefeller and KarláKroeker's Woodline Partners, George McCabe's Portolan Capital Management, and Brad Farber's Atika Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Hill-Rom Holdings, Inc. (NYSE:HRC) but similarly valued. These stocks are NovoCure Limited (NASDAQ:NVCR), Royal Caribbean Cruises Ltd. (NYSE:RCL), Equitable Holdings, Inc. (NYSE:EQH), and Dynatrace, Inc. (NYSE:DT). This group of stocks' market values match HRC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVCR,27,371639,5 RCL,25,405608,-18 EQH,27,821993,-6 DT,35,725860,10 Average,28.5,581275,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $581 million. That figure was $738 million in HRC's case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand Royal Caribbean Cruises Ltd. (NYSE:RCL) is the least popular one with only 25 bullish hedge fund positions. Hill-Rom Holdings, Inc. (NYSE:HRC) 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately HRC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on HRC were disappointed as the stock returned 1.1% 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.