Hedge Funds Are Betting On HCA Healthcare Inc (HCA)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of HCA Healthcare Inc (NYSE:HCA) based on that data.

Is HCA Healthcare Inc (NYSE:HCA) a worthy stock to buy now? Prominent investors were becoming more confident. The number of bullish hedge fund bets went up by 12 lately. HCA Healthcare Inc (NYSE:HCA) was in 72 hedge funds’ portfolios at the end of September. The all time high for this statistic is 87. Our calculations also showed that HCA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 60 hedge funds in our database with HCA positions at the end of the second quarter.

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. Keeping this in mind let’s take a peek at the latest hedge fund action encompassing HCA Healthcare Inc (NYSE:HCA).


Louis Bacon Moore of Moore Capital

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

At Q3’s end, a total of 72 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2021. On the other hand, there were a total of 71 hedge funds with a bullish position in HCA a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in HCA Healthcare Inc (NYSE:HCA). Arrowstreet Capital has a $556.4 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Cryder Capital, led by Ferdinand Groos, holding a $272.3 million position; 13.6% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions consist of Andrew Wellington and Jeff Keswin’s Lyrical Asset Management, Gavin M. Abrams’s Abrams Bison Investments and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to HCA Healthcare Inc (NYSE:HCA), around 18.76% of its 13F portfolio. Cryder Capital is also relatively very bullish on the stock, designating 13.59 percent of its 13F equity portfolio to HCA.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in HCA Healthcare Inc (NYSE:HCA). Citadel Investment Group had $174 million invested in the company at the end of the quarter. OrbiMed Advisors also made a $47 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Kevin Molloy’s Iron Triangle Partners, and Louis Bacon’s Moore Global Investments.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as HCA Healthcare Inc (NYSE:HCA) but similarly valued. These stocks are Zoom Video Communications, Inc. (NASDAQ:ZM), Marsh & McLennan Companies, Inc. (NYSE:MMC), General Motors Company (NYSE:GM), Fidelity National Information Services Inc. (NYSE:FIS), Duke Energy Corporation (NYSE:DUK), Crown Castle International Corp. (NYSE:CCI), and Chubb Limited (NYSE:CB). This group of stocks’ market caps resemble HCA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ZM 56 6003836 -3
MMC 42 1987176 1
GM 77 6416552 -9
FIS 69 6044245 -3
DUK 32 687541 -4
CCI 45 2089073 3
CB 30 1272774 -12
Average 50.1 3500171 -3.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 50.1 hedge funds with bullish positions and the average amount invested in these stocks was $3500 million. That figure was $3310 million in HCA’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Chubb Limited (NYSE:CB) is the least popular one with only 30 bullish hedge fund positions. HCA Healthcare Inc (NYSE:HCA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HCA is 79.5. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately HCA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HCA were disappointed as the stock returned -7.1% since the end of September (through 11/30) 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.