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SC Health Corporation (SCPE): Are Hedge Funds Right About This Stock?

Abigail Fisher

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the first quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of SC Health Corporation (NYSE:SCPE) based on that data.

SC Health Corporation (NYSE:SCPE) was in 16 hedge funds' portfolios at the end of the first quarter of 2020. SCPE has experienced a decrease in activity from the world's largest hedge funds recently. There were 17 hedge funds in our database with SCPE positions at the end of the previous quarter. Our calculations also showed that SCPE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are tons of formulas stock traders put to use to analyze stocks. A pair of the less known formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outperform the market by a superb amount (see the details here).

[caption id="attachment_341290" align="aligncenter" width="397"] Phillip Goldstein of Bulldog Investors[/caption]

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's analyze the new hedge fund action regarding SC Health Corporation (NYSE:SCPE).

Hedge fund activity in SC Health Corporation (NYSE:SCPE)

Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in SCPE a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in SC Health Corporation (NYSE:SCPE) was held by Perceptive Advisors, which reported holding $10 million worth of stock at the end of September. It was followed by Hudson Bay Capital Management with a $8 million position. Other investors bullish on the company included Glazer Capital, Moore Global Investments, and Hudson Bay Capital Management. In terms of the portfolio weights assigned to each position Bulldog Investors allocated the biggest weight to SC Health Corporation (NYSE:SCPE), around 0.43% of its 13F portfolio. Glazer Capital is also relatively very bullish on the stock, earmarking 0.41 percent of its 13F equity portfolio to SCPE.

Since SC Health Corporation (NYSE:SCPE) has experienced a decline in interest from the smart money, logic holds that there is a sect of fund managers that slashed their full holdings by the end of the first quarter. It's worth mentioning that Greg Poole's Echo Street Capital Management cut the biggest stake of all the hedgies monitored by Insider Monkey, worth about $5.2 million in stock. John Thiessen's fund, Vertex One Asset Management, also cut its stock, about $1.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.

Let's check out hedge fund activity in other stocks similar to SC Health Corporation (NYSE:SCPE). These stocks are Jumia Technologies AG (NYSE:JMIA), Atlantic Power Corp (NYSE:AT), IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP), and Allied Motion Technologies, Inc. (NASDAQ:AMOT). All of these stocks' market caps resemble SCPE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JMIA,6,7689,0 AT,10,22041,-2 IRCP,4,7670,0 AMOT,13,36277,2 Average,8.25,18419,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $57 million in SCPE's case. Allied Motion Technologies, Inc. (NASDAQ:AMOT) is the most popular stock in this table. On the other hand IRSA Propiedades Comerciales S.A. (NASDAQ:IRCP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks SC Health Corporation (NYSE:SCPE) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately SCPE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on SCPE were disappointed as the stock returned 0.1% during the second quarter (through June 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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