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Were Hedge Funds Right About Healthcare Trust Of America Inc (HTA)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Healthcare Trust Of America Inc (NYSE:HTA).

Is Healthcare Trust Of America Inc (NYSE:HTA) going to take off soon? Money managers were turning bullish. The number of bullish hedge fund positions moved up by 3 lately. Healthcare Trust Of America Inc (NYSE:HTA) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 20. Our calculations also showed that HTA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 14 hedge funds in our database with HTA holdings at the end of December.

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.

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now let's take a glance at the key hedge fund action regarding Healthcare Trust Of America Inc (NYSE:HTA).

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

At first quarter's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards HTA over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Citadel Investment Group held the most valuable stake in Healthcare Trust Of America Inc (NYSE:HTA), which was worth $48.4 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $22.4 million worth of shares. Renaissance Technologies, Balyasny Asset Management, and AQR Capital 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 LDR Capital allocated the biggest weight to Healthcare Trust Of America Inc (NYSE:HTA), around 0.4% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to HTA.

As one would reasonably expect, key hedge funds have been driving this bullishness. Tudor Investment Corp, managed by Paul Tudor Jones, created the biggest position in Healthcare Trust Of America Inc (NYSE:HTA). Tudor Investment Corp had $5 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Lawrence Raiman's LDR Capital, and Andrew Weiss's Weiss Asset Management.

Let's check out hedge fund activity in other stocks similar to Healthcare Trust Of America Inc (NYSE:HTA). We will take a look at Twist Bioscience Corporation (NASDAQ:TWST), Olin Corporation (NYSE:OLN), KT Corporation (NYSE:KT), Brixmor Property Group Inc (NYSE:BRX), Ardagh Group S.A. (NYSE:ARD), Nordstrom, Inc. (NYSE:JWN), and Virtu Financial Inc (NASDAQ:VIRT). This group of stocks' market caps resemble HTA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TWST,24,1115257,1 OLN,34,1170833,11 KT,12,166402,1 BRX,18,127975,12 ARD,11,125401,3 JWN,34,293042,0 VIRT,22,301753,-5 Average,22.1,471523,3.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $472 million. That figure was $120 million in HTA's case. Olin Corporation (NYSE:OLN) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 11 bullish hedge fund positions. Healthcare Trust Of America Inc (NYSE:HTA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for HTA is 46.5. 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately HTA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); HTA investors were disappointed as the stock returned 6.6% since the end of March (through 7/23) 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 in 2021.

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