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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Ventas, Inc. (NYSE:VTR) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is VTR a good stock to buy now? Ventas, Inc. (NYSE:VTR) was in 17 hedge funds' portfolios at the end of September. The all time high for this statistic is 29. VTR has seen a decrease in hedge fund sentiment lately. There were 21 hedge funds in our database with VTR positions at the end of the second quarter. Our calculations also showed that VTR isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to view the recent hedge fund action regarding Ventas, Inc. (NYSE:VTR).
Do Hedge Funds Think VTR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in VTR over the last 21 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, Eminence Capital held the most valuable stake in Ventas, Inc. (NYSE:VTR), which was worth $59.2 million at the end of the third quarter. On the second spot was Land & Buildings Investment Management which amassed $19.3 million worth of shares. Citadel Investment Group, Adage Capital Management, and Balyasny Asset Management 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 Land & Buildings Investment Management allocated the biggest weight to Ventas, Inc. (NYSE:VTR), around 3.54% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 1.31 percent of its 13F equity portfolio to VTR.
Judging by the fact that Ventas, Inc. (NYSE:VTR) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few hedge funds who sold off their full holdings heading into Q4. At the top of the heap, Renaissance Technologies dropped the biggest position of the 750 funds tracked by Insider Monkey, comprising about $23.6 million in stock. Seth Klarman's fund, Baupost Group, also sold off its stock, about $20.1 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let's also examine hedge fund activity in other stocks similar to Ventas, Inc. (NYSE:VTR). We will take a look at Dover Corporation (NYSE:DOV), Avangrid, Inc. (NYSE:AGR), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), FirstEnergy Corp. (NYSE:FE), Insulet Corporation (NASDAQ:PODD), Etsy Inc (NASDAQ:ETSY), and Quest Diagnostics Incorporated (NYSE:DGX). This group of stocks' market values resemble VTR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DOV,40,687494,0 AGR,11,34978,-7 SSNC,54,2313500,-11 FE,59,1286114,18 PODD,38,1152530,-6 ETSY,51,1899908,8 DGX,42,412437,-4 Average,42.1,1112423,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.1 hedge funds with bullish positions and the average amount invested in these stocks was $1112 million. That figure was $133 million in VTR's case. FirstEnergy Corp. (NYSE:FE) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 11 bullish hedge fund positions. Ventas, Inc. (NYSE:VTR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VTR is 24.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on VTR as the stock returned 14% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.