The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Cerner Corporation (NASDAQ:CERN) based on those filings.
Cerner Corporation (NASDAQ:CERN) shareholders have witnessed an increase in hedge fund interest lately. Our calculations also showed that CERN 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.
In the financial world there are plenty of tools stock market investors employ to analyze publicly traded companies. A pair of the most under-the-radar tools are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can trounce the market by a very impressive amount (see the details here).
[caption id="attachment_189672" align="aligncenter" width="399"] David Blood of Generation Investment Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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 we're going to view the recent hedge fund action encompassing Cerner Corporation (NASDAQ:CERN).
What does smart money think about Cerner Corporation (NASDAQ:CERN)?
At Q1's end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in CERN a year ago. With the smart money's capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Cerner Corporation (NASDAQ:CERN) was held by Generation Investment Management, which reported holding $328.4 million worth of stock at the end of September. It was followed by Starboard Value LP with a $218.9 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Kingstown Capital Management. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to Cerner Corporation (NASDAQ:CERN), around 8.87% of its 13F portfolio. Freshford Capital Management is also relatively very bullish on the stock, designating 7.98 percent of its 13F equity portfolio to CERN.
As aggregate interest increased, specific money managers have jumped into Cerner Corporation (NASDAQ:CERN) headfirst. Kingstown Capital Management, managed by Michael Blitzer, assembled the largest position in Cerner Corporation (NASDAQ:CERN). Kingstown Capital Management had $40.9 million invested in the company at the end of the quarter. Greg Poole's Echo Street Capital Management also initiated a $14.9 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, John Overdeck and David Siegel's Two Sigma Advisors, and Greg Eisner's Engineers Gate Manager.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cerner Corporation (NASDAQ:CERN) but similarly valued. We will take a look at Barclays PLC (NYSE:BCS), Archer Daniels Midland Company (NYSE:ADM), Ecopetrol S.A. (NYSE:EC), and Liberty Broadband Corp (NASDAQ:LBRDA). This group of stocks' market values resemble CERN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCS,13,33314,2 ADM,32,563664,4 EC,12,107803,1 LBRDA,26,655556,2 Average,20.75,340084,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $340 million. That figure was $1006 million in CERN's case. Archer Daniels Midland Company (NYSE:ADM) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Cerner Corporation (NASDAQ:CERN) is more popular among hedge funds. 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 and still beat the market by 13.2 percentage points. Unfortunately CERN wasn't nearly as popular as these 10 stocks and hedge funds that were betting on CERN were disappointed as the stock returned 16.1% during the second quarter (through the end of May) 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.