Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about LHC Group, Inc. (NASDAQ:LHCG) and compare it against similarly valued stocks such as Chegg Inc (NYSE:CHGG), LivaNova PLC (NASDAQ:LIVN), Neogen Corporation (NASDAQ:NEOG), and National Health Investors Inc (NYSE:NHI).
Is LHC Group, Inc. (NASDAQ:LHCG) a healthy stock for your portfolio? Money managers are taking an optimistic view. The number of bullish hedge fund bets improved by 1 in recent months. Our calculations also showed that LHCG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are numerous methods investors can use to evaluate stocks. A duo of the less utilized methods are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a superb margin (see the details here).
[caption id="attachment_731850" align="aligncenter" width="473"] Paul Glazer of Glazer Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's analyze the key hedge fund action encompassing LHC Group, Inc. (NASDAQ:LHCG).
How are hedge funds trading LHC Group, Inc. (NASDAQ:LHCG)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in LHCG over the last 17 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in LHC Group, Inc. (NASDAQ:LHCG) was held by Glazer Capital, which reported holding $13.4 million worth of stock at the end of September. It was followed by Governors Lane with a $11.4 million position. Other investors bullish on the company included BlueCrest Capital Mgmt., Marshall Wace, and Columbus Circle Investors. In terms of the portfolio weights assigned to each position Glazer Capital allocated the biggest weight to LHC Group, Inc. (NASDAQ:LHCG), around 1.64% of its portfolio. Governors Lane is also relatively very bullish on the stock, dishing out 1.51 percent of its 13F equity portfolio to LHCG.
As industrywide interest jumped, specific money managers have jumped into LHC Group, Inc. (NASDAQ:LHCG) headfirst. Millennium Management, managed by Israel Englander, assembled the most outsized position in LHC Group, Inc. (NASDAQ:LHCG). Millennium Management had $2.6 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also initiated a $1.6 million position during the quarter. The other funds with brand new LHCG positions are Michael Platt and William Reeves's BlueCrest Capital Mgmt., Paul Marshall and Ian Wace's Marshall Wace, and Mike Vranos's Ellington.
Let's now take a look at hedge fund activity in other stocks similar to LHC Group, Inc. (NASDAQ:LHCG). These stocks are Chegg Inc (NYSE:CHGG), LivaNova PLC (NASDAQ:LIVN), Neogen Corporation (NASDAQ:NEOG), and National Health Investors Inc (NYSE:NHI). This group of stocks' market caps resemble LHCG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHGG,32,337398,6 LIVN,13,153754,-3 NEOG,13,24715,1 NHI,15,131310,2 Average,18.25,161794,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $112 million in LHCG's case. Chegg Inc (NYSE:CHGG) is the most popular stock in this table. On the other hand LivaNova PLC (NASDAQ:LIVN) is the least popular one with only 13 bullish hedge fund positions. LHC Group, Inc. (NASDAQ:LHCG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on LHCG as the stock returned 17.5% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.