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Did Hedge Funds Drop The Ball On Tivity Health, Inc. (TVTY) ?

Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 37.4% in 2019 (through the end of November) and outperformed the S&P 500 ETF by 9.9 percentage points. We are done processing the latest 13F filings and in this article we will study how hedge fund sentiment towards Tivity Health, Inc. (NASDAQ:TVTY) changed during the first quarter.

Tivity Health, Inc. (NASDAQ:TVTY) shareholders have witnessed an increase in support from the world’s most elite money managers recently. TVTY was in 19 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with TVTY holdings at the end of the previous quarter. Our calculations also showed that TVTY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are plenty of tools stock market investors employ to value their stock investments. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can trounce the market by a solid amount (see the details here).

Parag Vora - HG Vora Capital

Parag Vora of HG Vora Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s review the new hedge fund action regarding Tivity Health, Inc. (NASDAQ:TVTY).

Hedge fund activity in Tivity Health, Inc. (NASDAQ:TVTY)

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TVTY over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Parag Vora’s HG Vora Capital Management has the most valuable position in Tivity Health, Inc. (NASDAQ:TVTY), worth close to $79 million, comprising 7.6% of its total 13F portfolio. Coming in second is Miller Value Partners, managed by Bill Miller, which holds a $61.2 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Douglas Braunstein and James Woolery’s Hudson Executive Capital, David E. Shaw’s D E Shaw and Paul Marshall and Ian Wace’s Marshall Wace. In terms of the portfolio weights assigned to each position HG Vora Capital Management allocated the biggest weight to Tivity Health, Inc. (NASDAQ:TVTY), around 7.57% of its 13F portfolio. Hudson Executive Capital is also relatively very bullish on the stock, dishing out 2.95 percent of its 13F equity portfolio to TVTY.

Now, some big names have been driving this bullishness. Hudson Executive Capital, managed by Douglas Braunstein and James Woolery, created the most valuable position in Tivity Health, Inc. (NASDAQ:TVTY). Hudson Executive Capital had $39 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $2.9 million position during the quarter. The following funds were also among the new TVTY investors: Philippe Laffont’s Coatue Management, Minhua Zhang’s Weld Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to Tivity Health, Inc. (NASDAQ:TVTY). We will take a look at Origin Bancorp, Inc. (NASDAQ:OBNK), Carolina Financial Corporation (NASDAQ:CARO), Northfield Bancorp Inc (Staten Island, NY) (NASDAQ:NFBK), and Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX). This group of stocks’ market valuations resemble TVTY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OBNK 6 30331 2
CARO 8 48350 0
NFBK 8 40560 6
BLX 1 6635 0
Average 5.75 31469 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $233 million in TVTY’s case. Carolina Financial Corporation (NASDAQ:CARO) is the most popular stock in this table. On the other hand Banco Latinoamericano de Comercio Exterior, S.A. (NYSE:BLX) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Tivity Health, Inc. (NASDAQ:TVTY) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on TVTY as the stock returned 36.2% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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