Brookdale Senior Living, Inc. (BKD) Fell Out Of Favor With Hedge Funds

In this article we will check out the progression of hedge fund sentiment towards Brookdale Senior Living, Inc. (NYSE:BKD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Brookdale Senior Living, Inc. (NYSE:BKD) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 66. BKD has seen a decrease in hedge fund interest of late. There were 32 hedge funds in our database with BKD positions at the end of the second quarter. Our calculations also showed that BKD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s take a peek at the recent hedge fund action regarding Brookdale Senior Living, Inc. (NYSE:BKD).

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

At third quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in BKD over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

The largest stake in Brookdale Senior Living, Inc. (NYSE:BKD) was held by Camber Capital Management, which reported holding $100.8 million worth of stock at the end of September. It was followed by Glenview Capital with a $84.8 million position. Other investors bullish on the company included Renaissance Technologies, Deerfield Management, and D E Shaw. In terms of the portfolio weights assigned to each position 59 North Capital allocated the biggest weight to Brookdale Senior Living, Inc. (NYSE:BKD), around 7.69% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, setting aside 3.88 percent of its 13F equity portfolio to BKD.

Judging by the fact that Brookdale Senior Living, Inc. (NYSE:BKD) has faced declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their full holdings by the end of the third quarter. At the top of the heap, Eduardo Abush’s Waterfront Capital Partners cut the biggest stake of the 750 funds monitored by Insider Monkey, worth close to $6.5 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $1.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 5 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Brookdale Senior Living, Inc. (NYSE:BKD) but similarly valued. These stocks are Kronos Bio, Inc. (NASDAQ:KRON), First Foundation Inc (NASDAQ:FFWM), View, Inc. (NASDAQ:VIEW), Tenneco Inc (NYSE:TEN), Materialise NV (NASDAQ:MTLS), Federal Agricultural Mortgage Corp. (NYSE:AGM), and Huron Consulting Group Inc. (NASDAQ:HURN). All of these stocks’ market caps resemble BKD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $424 million in BKD’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand Federal Agricultural Mortgage Corp. (NYSE:AGM) is the least popular one with only 7 bullish hedge fund positions. Brookdale Senior Living, Inc. (NYSE:BKD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BKD is 62.3. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately BKD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BKD were disappointed as the stock returned -6.8% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.

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