Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Sabra Health Care REIT Inc (NASDAQ:SBRA).
Is Sabra Health Care REIT Inc (NASDAQ:SBRA) the right investment to pursue these days? Money managers are in a bearish mood. The number of long hedge fund positions dropped by 10 in recent months. Our calculations also showed that SBRA 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 eyes of most market participants, hedge funds are seen as worthless, old financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, Our experts choose to focus on the aristocrats of this club, around 850 funds. It is estimated that this group of investors orchestrate the lion's share of the hedge fund industry's total capital, and by following their matchless stock picks, Insider Monkey has figured out a number of investment strategies that have historically outperformed the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_337897" align="aligncenter" width="392"] J. Alan Reid, Jr. of Forward Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 let's view the key hedge fund action regarding Sabra Health Care REIT Inc (NASDAQ:SBRA).
How have hedgies been trading Sabra Health Care REIT Inc (NASDAQ:SBRA)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -37% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SBRA over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, John Khoury's Long Pond Capital has the most valuable position in Sabra Health Care REIT Inc (NASDAQ:SBRA), worth close to $89.8 million, accounting for 4.6% of its total 13F portfolio. Sitting at the No. 2 spot is D E Shaw, managed by D. E. Shaw, which holds a $11.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Ken Griffin's Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and J. Alan Reid, Jr.'s Forward Management. In terms of the portfolio weights assigned to each position Long Pond Capital allocated the biggest weight to Sabra Health Care REIT Inc (NASDAQ:SBRA), around 4.6% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, setting aside 1.69 percent of its 13F equity portfolio to SBRA.
Because Sabra Health Care REIT Inc (NASDAQ:SBRA) has experienced declining sentiment from the smart money, it's easy to see that there exists a select few funds who were dropping their positions entirely in the first quarter. At the top of the heap, Israel Englander's Millennium Management dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, worth close to $16.9 million in stock, and Daniel Johnson's Gillson Capital was right behind this move, as the fund sold off about $6.1 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 10 funds in the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Sabra Health Care REIT Inc (NASDAQ:SBRA) but similarly valued. We will take a look at Itron, Inc. (NASDAQ:ITRI), Quaker Chemical Corp (NYSE:KWR), Vivint Smart Home, Inc. (NYSE:VVNT), and ViaSat, Inc. (NASDAQ:VSAT). This group of stocks' market values are similar to SBRA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ITRI,19,246826,-2 KWR,8,120286,-1 VVNT,9,6514,-6 VSAT,21,947696,-5 Average,14.25,330331,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $147 million in SBRA's case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand Quaker Chemical Corp (NYSE:KWR) is the least popular one with only 8 bullish hedge fund positions. Sabra Health Care REIT Inc (NASDAQ:SBRA) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on SBRA as the stock returned 35.1% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.