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Hedge Funds Are Warming Up To Brookdale Senior Living, Inc. (BKD)

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We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article, we look at what those funds think of Brookdale Senior Living, Inc. (NYSE:BKD) based on that data.

Is Brookdale Senior Living, Inc. (NYSE:BKD) going to take off soon? The smart money was getting more bullish. The number of bullish hedge fund positions moved up by 9 recently. Brookdale Senior Living, Inc. (NYSE:BKD) was in 32 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 66. Our calculations also showed that BKD isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

James Dondero Highland Capital Management
James Dondero Highland Capital Management

James Dondero of Highland Capital Management

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. Keeping this in mind we're going to view the recent hedge fund action surrounding Brookdale Senior Living, Inc. (NYSE:BKD).

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

At the end of the second quarter, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 39% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BKD over the last 24 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Camber Capital Management held the most valuable stake in Brookdale Senior Living, Inc. (NYSE:BKD), which was worth $121.3 million at the end of the second quarter. On the second spot was Glenview Capital which amassed $116.2 million worth of shares. Renaissance Technologies, D E Shaw, and 59 North Capital 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 59 North Capital allocated the biggest weight to Brookdale Senior Living, Inc. (NYSE:BKD), around 10.11% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 4.09 percent of its 13F equity portfolio to BKD.

As one would reasonably expect, some big names have been driving this bullishness. Clough Capital Partners, managed by Charles Clough, assembled the most valuable position in Brookdale Senior Living, Inc. (NYSE:BKD). Clough Capital Partners had $9.2 million invested in the company at the end of the quarter. James Thomas Berylson's Berylson Capital Partners also initiated a $9.1 million position during the quarter. The other funds with brand new BKD positions are Lee Ainslie's Maverick Capital, James Dondero's Highland Capital Management, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's also examine hedge fund activity in other stocks similar to Brookdale Senior Living, Inc. (NYSE:BKD). We will take a look at Mission Produce, Inc. (NASDAQ:AVO), Codexis, Inc. (NASDAQ:CDXS), Inogen Inc (NASDAQ:INGN), Ladder Capital Corp (NYSE:LADR), Golar LNG Limited (NASDAQ:GLNG), Griffon Corporation (NYSE:GFF), and Enterprise Financial Services Corp (NASDAQ:EFSC). All of these stocks' market caps are closest to BKD's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVO,1,369,-2 CDXS,16,415578,3 INGN,19,65293,7 LADR,9,30556,-2 GLNG,17,360753,-3 GFF,10,148835,-3 EFSC,9,30331,-5 Average,11.6,150245,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $500 million in BKD's case. Inogen Inc (NASDAQ:INGN) is the most popular stock in this table. On the other hand Mission Produce, Inc. (NASDAQ:AVO) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Brookdale Senior Living, Inc. (NYSE:BKD) is more popular among hedge funds. Our overall hedge fund sentiment score for BKD is 74.5. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately BKD wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BKD were disappointed as the stock returned -16.5% since the end of the second quarter (through 10/15) 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.