Here is What Hedge Funds Think About Bausch Health Companies (BHC)
The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Bausch Health Companies (NYSE:BHC).
Is Bausch Health Companies (NYSE:BHC) a splendid investment now? The smart money was taking a bearish view. The number of long hedge fund positions went down by 1 lately. Bausch Health Companies (NYSE:BHC) was in 42 hedge funds' portfolios at the end of March. The all time high for this statistic is 43. Our calculations also showed that BHC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 43 hedge funds in our database with BHC positions at the end of the fourth quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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. With all of this in mind we're going to take a gander at the latest hedge fund action surrounding Bausch Health Companies (NYSE:BHC).
Do Hedge Funds Think BHC Is A Good Stock To Buy Now?
At the end of March, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. On the other hand, there were a total of 35 hedge funds with a bullish position in BHC a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Icahn Capital LP held the most valuable stake in Bausch Health Companies (NYSE:BHC), which was worth $1082.6 million at the end of the fourth quarter. On the second spot was Paulson & Co which amassed $820.1 million worth of shares. ValueAct Capital, Glenview Capital, and GoldenTree Asset Management 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 Chou Associates Management allocated the biggest weight to Bausch Health Companies (NYSE:BHC), around 24.18% of its 13F portfolio. Paulson & Co is also relatively very bullish on the stock, designating 18.83 percent of its 13F equity portfolio to BHC.
Judging by the fact that Bausch Health Companies (NYSE:BHC) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of money managers who were dropping their full holdings heading into Q2. Interestingly, Stephen DuBois's Camber Capital Management said goodbye to the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $88.4 million in stock. Steve Cohen's fund, Point72 Asset Management, also cut its stock, about $72.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q2.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Bausch Health Companies (NYSE:BHC) but similarly valued. We will take a look at Qiagen NV (NASDAQ:QGEN), Globe Life Inc. (NYSE:GL), Bunge Limited (NYSE:BG), The Gap Inc. (NYSE:GPS), Universal Display Corporation (NASDAQ:OLED), Playtika Holding Corp. (NASDAQ:PLTK), and The Toro Company (NYSE:TTC). This group of stocks' market values resemble BHC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QGEN,27,562548,3 GL,33,844018,2 BG,44,653455,-7 GPS,42,988959,4 OLED,17,95398,-7 PLTK,21,444574,21 TTC,32,1016572,1 Average,30.9,657932,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $658 million. That figure was $4077 million in BHC's case. Bunge Limited (NYSE:BG) is the most popular stock in this table. On the other hand Universal Display Corporation (NASDAQ:OLED) is the least popular one with only 17 bullish hedge fund positions. Bausch Health Companies (NYSE:BHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHC is 79.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately BHC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BHC were disappointed as the stock returned -7.7% since the end of March (through 6/18) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
