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Brookdale Senior Living Inc. (BKD): Hedge Fund Sentiment Takes a Turn for the Worse

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Investing in hedge funds can bring large profits, but this practice is not for everybody given that hedge funds are only available for high-net-worth individuals. They generate significant returns for their investors to justify their large fees, which they accomplish by allocating a lot of time and employing complex strategies to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the basket of small-caps. The huge amount of capital does not allow hedge funds to focus solely on small-caps, but our research shows that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is the primary reason why the Insider Monkey team follows the hedge fund activity in the small-cap space (see more details here). For that reason, the following article will discuss the hedge fund sentiment towards one of those small-cap stocks, Brookdale Senior Living Inc. (NYSE:BKD).

Brookdale Senior Living Inc. (NYSE:BKD) was in 57 hedge funds’ portfolios at the end of December. BKD investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 66 hedge funds in our database with BKD holdings at the end of the previous quarter. However, hedge funds in our system own 44.30% of the company’s shares, so overall sentiment is still very high. 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 Rackspace Hosting, Inc. (NYSE:RAX), Webster Financial Corporation (NYSE:WBS), and Starz (NASDAQ:STRZA) to gather more data points.

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Brookdale Senior Living Inc. (NYSE:BKD) functions as one of the largest operators of senior living communities in the United States based on capacity, serving roughly 108,000 residents in 1,123 communities. The elder care company intends to grow its business operations through a mix of occupancy growth and increases in monthly service fees, as well as by engaging in acquisitions. The senior living industry has experienced exceptional growth over the past 20 years or so, thanks to the emergence of assisted living in the 1990’s. Moreover, the senior living industry is anticipated to experience sustained growth in the upcoming years as well, considering that the group of individuals aged 75 and above is anticipated to be the fastest growing age group over the next two decades. Seniors are living longer, so this demographic trend will most likely lead to increased demand for senior living services.

Billionaire Larry Robbins of Glenview Capital said at the Sohn Investment Conference back in 2015 that an investment in Brookdale Senior Living Inc. (NYSE:BKD) represents a bet on the aging population. “By far the easiest thing to bet on is the aging populations”, said Mr. Robbins at the time. Meanwhile, Brookdale Senior Living has been very successful in monetizing on the aforementioned demographic trend during the past several years. The company’s 2015 total revenue was $4.96 billion, up from $3.83 billion in 2014, $2.89 billion in 2013 and $2.77 billion in 2012.

With all of this in mind, let’s check out the latest trading action encompassing Brookdale Senior Living Inc. (NYSE:BKD), as well as discuss an activist’s thoughts on the company and its potential.

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