U.S. Markets closed

Here’s What Hedge Funds Think About National Health Investors Inc (NHI)

Asma UL Husna

We at Insider Monkey have gone over 738 13F filings that hedge funds and famous value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of National Health Investors Inc (NYSE:NHI).

Is National Health Investors Inc (NYSE:NHI) an exceptional investment right now? The best stock pickers are becoming less hopeful. The number of long hedge fund bets shrunk by 1 in recent months. Our calculations also showed that NHI isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bruce Kovner, Caxton Associates LP

Let's check out the latest hedge fund action surrounding National Health Investors Inc (NYSE:NHI).

What does smart money think about National Health Investors Inc (NYSE:NHI)?

At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in NHI a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

NHI_june2019

Among these funds, Renaissance Technologies held the most valuable stake in National Health Investors Inc (NYSE:NHI), which was worth $79.4 million at the end of the first quarter. On the second spot was Millennium Management which amassed $23.7 million worth of shares. Moreover, Two Sigma Advisors, Citadel Investment Group, and Citadel Investment Group were also bullish on National Health Investors Inc (NYSE:NHI), allocating a large percentage of their portfolios to this stock.

Seeing as National Health Investors Inc (NYSE:NHI) has witnessed a decline in interest from the smart money, logic holds that there lies a certain "tier" of funds that decided to sell off their entire stakes last quarter. Interestingly, Peter Algert and Kevin Coldiron's Algert Coldiron Investors dropped the biggest stake of the "upper crust" of funds monitored by Insider Monkey, comprising close to $1.1 million in stock. D. E. Shaw's fund, D E Shaw, also sold off its stock, about $0.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.

Let's check out hedge fund activity in other stocks similar to National Health Investors Inc (NYSE:NHI). These stocks are Laureate Education, Inc. (NASDAQ:LAUR), Investors Bancorp, Inc. (NASDAQ:ISBC), ASGN Incorporated (NYSE:ASGN), and Turquoise Hill Resources Ltd (NYSE:TRQ). All of these stocks' market caps are closest to NHI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LAUR,21,277072,-3 ISBC,24,658094,-3 ASGN,23,171702,2 TRQ,17,928990,1 Average,21.25,508965,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $509 million. That figure was $120 million in NHI's case. Investors Bancorp, Inc. (NASDAQ:ISBC) is the most popular stock in this table. On the other hand Turquoise Hill Resources Ltd (NYSE:TRQ) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks National Health Investors Inc (NYSE:NHI) is even less popular than TRQ. Hedge funds dodged a bullet by taking a bearish stance towards NHI. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NHI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NHI investors were disappointed as the stock returned 2.6% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.

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

Related Content