Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of New Frontier Health Corporation (NYSE:NFH) based on that data.
New Frontier Health Corporation (NYSE:NFH) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that NFH 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 a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30570" align="aligncenter" width="394"] James Dinan of York Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to analyze the latest hedge fund action encompassing New Frontier Health Corporation (NYSE:NFH).
What have hedge funds been doing with New Frontier Health Corporation (NYSE:NFH)?
Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in NFH a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Vivo Capital was the largest shareholder of New Frontier Health Corporation (NYSE:NFH), with a stake worth $118 million reported as of the end of September. Trailing Vivo Capital was York Capital Management, which amassed a stake valued at $27.2 million. Ovata Capital Management, Maso Capital, and Ariose Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Vivo Capital allocated the biggest weight to New Frontier Health Corporation (NYSE:NFH), around 10.69% of its 13F portfolio. Ovata Capital Management is also relatively very bullish on the stock, earmarking 4.21 percent of its 13F equity portfolio to NFH.
As one would reasonably expect, specific money managers have jumped into New Frontier Health Corporation (NYSE:NFH) headfirst. York Capital Management, managed by James Dinan, established the largest position in New Frontier Health Corporation (NYSE:NFH). York Capital Management had $27.2 million invested in the company at the end of the quarter. Yi Xin's Ariose Capital also made a $3.8 million investment in the stock during the quarter. The following funds were also among the new NFH investors: Anand Parekh's Alyeska Investment Group, Jonathan Guo's Yiheng Capital, and Seth Fischer's Oasis Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as New Frontier Health Corporation (NYSE:NFH) but similarly valued. We will take a look at Inovio Pharmaceuticals Inc (NASDAQ:INO), Urban Edge Properties (NYSE:UE), PennyMac Mortgage Investment Trust (NYSE:PMT), and Gray Television, Inc. (NYSE:GTN). This group of stocks' market valuations are similar to NFH's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INO,8,22544,3 UE,21,68712,2 PMT,12,56020,-7 GTN,21,131988,-3 Average,15.5,69816,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $173 million in NFH's case. Urban Edge Properties (NYSE:UE) is the most popular stock in this table. On the other hand Inovio Pharmaceuticals Inc (NASDAQ:INO) is the least popular one with only 8 bullish hedge fund positions. New Frontier Health Corporation (NYSE:NFH) 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately NFH wasn't nearly as popular as these 10 stocks and hedge funds that were betting on NFH were disappointed as the stock returned -3.3% 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.