We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. That's a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
National Health Investors Inc (NYSE:NHI) has experienced an increase in support from the world's most elite money managers in recent months. Even though overall hedge fund sentiment towards the stock is currently at its all time high, our calculations also showed that NHI isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are viewed as underperforming, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, Our experts hone in on the leaders of this group, around 750 funds. Most estimates calculate that this group of people orchestrate most of the hedge fund industry's total asset base, and by tracking their inimitable stock picks, Insider Monkey has brought to light several investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship hedge fund strategy outpaced the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's review the new hedge fund action encompassing National Health Investors Inc (NYSE:NHI).
How are hedge funds trading National Health Investors Inc (NYSE:NHI)?
Heading into the third quarter of 2019, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NHI over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in National Health Investors Inc (NYSE:NHI), which was worth $69.6 million at the end of the second quarter. On the second spot was Millennium Management which amassed $33.8 million worth of shares. Moreover, Two Sigma Advisors, Citadel Investment Group, and Marshall Wace LLP were also bullish on National Health Investors Inc (NYSE:NHI), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in National Health Investors Inc (NYSE:NHI). Marshall Wace LLP had $6.8 million invested in the company at the end of the quarter. Minhua Zhang's Weld Capital Management also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer's PEAK6 Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as National Health Investors Inc (NYSE:NHI) but similarly valued. These stocks are Hancock Whitney Corporation (NASDAQ:HWC), Spirit Airlines Inc. (NYSE:SAVE), Bank of Hawaii Corporation (NYSE:BOH), and Helen of Troy Limited (NASDAQ:HELE). All of these stocks' market caps resemble NHI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HWC,16,103609,1 SAVE,31,302404,-3 BOH,12,87202,0 HELE,20,152715,-1 Average,19.75,161483,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $135 million in NHI's case. Spirit Airlines Inc. (NYSE:SAVE) is the most popular stock in this table. On the other hand Bank of Hawaii Corporation (NYSE:BOH) is the least popular one with only 12 bullish hedge fund positions. National Health Investors Inc (NYSE:NHI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on NHI as the stock returned 6.9% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.