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Hedge Funds Are Souring On Ventas, Inc. (VTR)

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  • VTR
  • ^GSPC

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Ventas, Inc. (NYSE:VTR) changed recently.

Ventas, Inc. (NYSE:VTR) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. VTR investors should be aware of a decrease in hedge fund interest recently. There were 27 hedge funds in our database with VTR holdings at the end of March. Our calculations also showed that VTR isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you'd ask most market participants, hedge funds are assumed to be unimportant, old investment vehicles of years past. While there are over 8000 funds with their doors open at present, We choose to focus on the moguls of this group, around 850 funds. These money managers control bulk of the hedge fund industry's total asset base, and by following their top investments, Insider Monkey has uncovered various investment strategies that have historically outrun the broader indices. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Stuart Zimmer Zimmer Partners
Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's take a peek at the recent hedge fund action encompassing Ventas, Inc. (NYSE:VTR).

Do Hedge Funds Think VTR Is A Good Stock To Buy Now?

At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VTR over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Zimmer Partners held the most valuable stake in Ventas, Inc. (NYSE:VTR), which was worth $196.3 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $75.4 million worth of shares. Balyasny Asset Management, Millennium Management, and Schonfeld Strategic Advisors 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 Land & Buildings Investment Management allocated the biggest weight to Ventas, Inc. (NYSE:VTR), around 5.27% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, setting aside 2.65 percent of its 13F equity portfolio to VTR.

Judging by the fact that Ventas, Inc. (NYSE:VTR) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there is a sect of hedge funds who were dropping their positions entirely heading into Q3. At the top of the heap, Stephen DuBois's Camber Capital Management sold off the largest investment of the 750 funds monitored by Insider Monkey, worth an estimated $48 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also cut its stock, about $5.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds heading into Q3.

Let's now review hedge fund activity in other stocks similar to Ventas, Inc. (NYSE:VTR). We will take a look at Expeditors International of Washington, Inc. (NASDAQ:EXPD), FleetCor Technologies, Inc. (NYSE:FLT), EXACT Sciences Corporation (NASDAQ:EXAS), Waters Corporation (NYSE:WAT), Invitation Homes Inc. (NYSE:INVH), Huntington Bancshares Incorporated (NASDAQ:HBAN), and Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). This group of stocks' market values are similar to VTR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXPD,29,498402,8 FLT,40,1876911,1 EXAS,35,2373655,-6 WAT,40,2643422,6 INVH,33,1131870,5 HBAN,33,443477,6 HZNP,56,4325284,8 Average,38,1899003,4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 38 hedge funds with bullish positions and the average amount invested in these stocks was $1899 million. That figure was $563 million in VTR's case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Expeditors International of Washington, Inc. (NASDAQ:EXPD) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Ventas, Inc. (NYSE:VTR) is even less popular than EXPD. Our overall hedge fund sentiment score for VTR is 28.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards VTR. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd but managed to beat the market again by 1.6 percentage points. Unfortunately VTR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); VTR investors were disappointed as the stock returned -2.8% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.