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Hedge Funds Are Dumping HCP, Inc. (HCP): Do They Know Something You Don’t?

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Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

HCP, Inc. (NYSE:HCP) has experienced a decrease in hedge fund sentiment recently. 14 hedge funds that we track were long the stock on September 30. There were 16 hedge funds in our database with HCP positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Molson Coors Brewing Company (NYSE:TAP), Ingersoll-Rand PLC (NYSE:IR), and American Airlines Group Inc (NASDAQ:AAL) to gather more data points.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading HCP, Inc. (NYSE:HCP)?

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a 13% dip from one quarter earlier as hedge fund ownership slides again. The graph below displays the number of hedge funds with bullish position in HCP over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies has the number one position in HCP, Inc. (NYSE:HCP), worth close to $52.3 million. Sitting at the No. 2 spot is Adage Capital Management, led by Phill Gross and Robert Atchinson, which holds a $25.4 million position. Other members of the smart money with similar optimism contain Glenn Russell Dubin’s Highbridge Capital Management, Cliff Asness’ AQR Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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