How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly-traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their stocks. They don’t always get it right, but, on average, their stock picks historically generate strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Cardinal Health, Inc. (NYSE:CAH).
Cardinal Health, Inc. (NYSE:CAH) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months, with the stock in 3 fewer portfolios of funds tracked by Insider Monkey. At the end of this article we will also compare CAH to other stocks including Southwest Airlines Co. (NYSE:LUV), AFLAC Incorporated (NYSE:AFL), and Nokia Corporation (ADR) (NYSE:NOK) to get a better sense of its popularity.
Today there are numerous formulas shareholders have at their disposal to appraise stocks. A pair of the most useful formulas are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can beat the market by a solid amount (see the details here).
With all of this in mind, let’s take a look at the recent action surrounding Cardinal Health, Inc. (NYSE:CAH).
What have hedge funds been doing with Cardinal Health, Inc. (NYSE:CAH)?
At the end of the third quarter, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 7% drop from the second quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or had already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the most valuable position in Cardinal Health, Inc. (NYSE:CAH), worth close to $140.3 million, accounting for 0.3% of its total 13F portfolio. The second-largest stake is held by Steven Richman of East Side Capital (RR Partners), with a $117.1 million position; 5% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of David Harding’s Winton Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and D E Shaw.