We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards New Senior Investment Group Inc (NYSE:SNR).
New Senior Investment Group Inc (NYSE:SNR) investors should pay attention to an increase in activity from the world's largest hedge funds recently. Our calculations also showed that SNR 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 the 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to analyze the latest hedge fund action surrounding New Senior Investment Group Inc (NYSE:SNR).
Hedge fund activity in New Senior Investment Group Inc (NYSE:SNR)
At Q3's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in SNR over the last 13 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of New Senior Investment Group Inc (NYSE:SNR), with a stake worth $28.4 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $7.1 million. Balyasny Asset Management, Proxima Capital Management, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the most valuable position in New Senior Investment Group Inc (NYSE:SNR). Balyasny Asset Management had $3.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace LLP also initiated a $0.2 million position during the quarter. The only other fund with a brand new SNR position is Mike Vranos's Ellington.
Let's go over hedge fund activity in other stocks similar to New Senior Investment Group Inc (NYSE:SNR). We will take a look at Invacare Corporation (NYSE:IVC), Cowen Inc. (NASDAQ:COWN), Ellington Financial LLC (NYSE:EFC), and Essendant Inc (NASDAQ:ESND). All of these stocks' market caps resemble SNR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IVC,16,88440,-3 COWN,15,107524,3 EFC,3,17897,0 ESND,12,75451,4 Average,11.5,72,1 [/table]
View table here if you experience formatting issues. As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $47 million in SNR's case. Invacare Corporation (NYSE:IVC) is the most popular stock in this table. On the other hand Ellington Financial LLC (NYSE:EFC) is the least popular one with only 3 bullish hedge fund positions. New Senior Investment Group Inc (NYSE:SNR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard IVC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.