"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Select Medical Holdings Corporation (NYSE:SEM).
Select Medical Holdings Corporation (NYSE:SEM) has seen an increase in support from the world's most elite money managers in recent months. SEM was in 21 hedge funds' portfolios at the end of March. There were 19 hedge funds in our database with SEM positions at the end of the previous quarter. Our calculations also showed that sem isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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.
Let's go over the fresh hedge fund action regarding Select Medical Holdings Corporation (NYSE:SEM).
Hedge fund activity in Select Medical Holdings Corporation (NYSE:SEM)
At Q1's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the fourth quarter of 2018. By comparison, 26 hedge funds held shares or bullish call options in SEM a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Select Medical Holdings Corporation (NYSE:SEM) was held by Fisher Asset Management, which reported holding $48.9 million worth of stock at the end of March. It was followed by Deerfield Management with a $28.8 million position. Other investors bullish on the company included Marshall Wace LLP, D E Shaw, and Millennium Management.
As aggregate interest increased, some big names have jumped into Select Medical Holdings Corporation (NYSE:SEM) headfirst. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, assembled the biggest position in Select Medical Holdings Corporation (NYSE:SEM). Healthcor Management LP had $8.5 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also initiated a $2.4 million position during the quarter. The following funds were also among the new SEM investors: Benjamin A. Smith's Laurion Capital Management, Peter Algert and Kevin Coldiron's Algert Coldiron Investors, and Brandon Haley's Holocene Advisors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Select Medical Holdings Corporation (NYSE:SEM) but similarly valued. These stocks are The RMR Group Inc. (NASDAQ:RMR), Visteon Corp (NASDAQ:VC), HFF, Inc. (NYSE:HF), and Banner Corporation (NASDAQ:BANR). This group of stocks' market values resemble SEM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RMR,20,50019,6 VC,21,189711,1 HF,11,70647,-2 BANR,18,94129,0 Average,17.5,101127,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $178 million in SEM's case. Visteon Corp (NASDAQ:VC) is the most popular stock in this table. On the other hand HFF, Inc. (NYSE:HF) is the least popular one with only 11 bullish hedge fund positions. Select Medical Holdings Corporation (NYSE:SEM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on SEM as the stock returned 3.1% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.