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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 fourth 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 6 years and analyze what the smart money thinks of Tenet Healthcare Corp (NYSE:THC) based on that data.
Is Tenet Healthcare Corp (NYSE:THC) a good stock to buy now? The smart money was betting on the stock. The number of bullish hedge fund positions inched up by 5 recently. Tenet Healthcare Corp (NYSE:THC) was in 39 hedge funds' portfolios at the end of March. The all time high for this statistic is 44. Our calculations also showed that THC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ole Andreas Halvorsen of Viking Global
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 battery 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. With all of this in mind let's check out the recent hedge fund action regarding Tenet Healthcare Corp (NYSE:THC).
Do Hedge Funds Think THC Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in THC over the last 23 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Glenview Capital held the most valuable stake in Tenet Healthcare Corp (NYSE:THC), which was worth $713.7 million at the end of the fourth quarter. On the second spot was Camber Capital Management which amassed $156 million worth of shares. Centerbridge Partners, Viking Global, and Nut Tree 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 Nut Tree Capital allocated the biggest weight to Tenet Healthcare Corp (NYSE:THC), around 15.17% of its 13F portfolio. Glenview Capital is also relatively very bullish on the stock, dishing out 12.09 percent of its 13F equity portfolio to THC.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Tenet Healthcare Corp (NYSE:THC) headfirst. Centerbridge Partners, managed by Mark T. Gallogly, assembled the biggest position in Tenet Healthcare Corp (NYSE:THC). Centerbridge Partners had $108.3 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also initiated a $76 million position during the quarter. The other funds with new positions in the stock are Joshua Friedman and Mitchell Julis's Canyon Capital Advisors, Ken Heebner's Capital Growth Management, and Steve Cohen's Point72 Asset Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Tenet Healthcare Corp (NYSE:THC) but similarly valued. We will take a look at Evercore Inc. (NYSE:EVR), Nextera Energy Partners LP (NYSE:NEP), Tandem Diabetes Care Inc (NASDAQ:TNDM), Douglas Emmett, Inc. (NYSE:DEI), SolarWinds Corporation (NYSE:SWI), Crane Co. (NYSE:CR), and MAXIMUS, Inc. (NYSE:MMS). This group of stocks' market caps are similar to THC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVR,31,365300,3 NEP,17,175587,-15 TNDM,25,204890,-1 DEI,14,337957,-7 SWI,22,2290541,-2 CR,17,277149,-7 MMS,18,116208,-6 Average,20.6,538233,-5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $538 million. That figure was $1515 million in THC's case. Evercore Inc. (NYSE:EVR) is the most popular stock in this table. On the other hand Douglas Emmett, Inc. (NYSE:DEI) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Tenet Healthcare Corp (NYSE:THC) is more popular among hedge funds. Our overall hedge fund sentiment score for THC is 86.6. 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 returned 19.3% in 2021 through June 25th but still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on THC as the stock returned 34.5% since the end of March (through 6/25) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.