Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hedge Funds Are Buying LHC Group, Inc. (LHCG)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 20% in the first 9 months of this year (through September 30th). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 24% during the same 9-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like LHC Group, Inc. (NASDAQ:LHCG).

Is LHC Group, Inc. (NASDAQ:LHCG) a bargain? The best stock pickers are turning bullish. The number of long hedge fund bets moved up by 3 recently. Our calculations also showed that LHCG isn’t among the 30 most popular stocks among hedge funds (view the video below). LHCG was in 26 hedge funds’ portfolios at the end of the second quarter of 2019. There were 23 hedge funds in our database with LHCG holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most market participants, hedge funds are seen as slow, old financial vehicles of the past. While there are more than 8000 funds trading at the moment, Our experts look at the elite of this group, around 750 funds. Most estimates calculate that this group of people preside over the majority of the smart money’s total asset base, and by observing their matchless investments, Insider Monkey has discovered a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

LHCG_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the fresh hedge fund action encompassing LHC Group, Inc. (NASDAQ:LHCG).

How are hedge funds trading LHC Group, Inc. (NASDAQ:LHCG)?

At Q2’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LHCG over the last 16 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Jeffrey Tannenbaum, Fir Tree

Among these funds, Governors Lane held the most valuable stake in LHC Group, Inc. (NASDAQ:LHCG), which was worth $11.4 million at the end of the second quarter. On the second spot was Arrowgrass Capital Partners which amassed $11.3 million worth of shares. Moreover, BlueCrest Capital Mgmt., Highbridge Capital Management, and Marshall Wace LLP were also bullish on LHC Group, Inc. (NASDAQ:LHCG), allocating a large percentage of their portfolios to this stock.

Now, key money managers have been driving this bullishness. BlueCrest Capital Mgmt., managed by Michael Platt and William Reeves, created the most outsized position in LHC Group, Inc. (NASDAQ:LHCG). BlueCrest Capital Mgmt. had $10 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $8.4 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Jeffrey Tannenbaum’s Fir Tree, and Steve Pigott’s Fort Baker Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as LHC Group, Inc. (NASDAQ:LHCG) but similarly valued. We will take a look at frontdoor, inc. (NASDAQ:FTDR), Texas Roadhouse Inc (NASDAQ:TXRH), Axon Enterprise, Inc. (NASDAQ:AAXN), and Globant SA (NYSE:GLOB). All of these stocks’ market caps match LHCG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FTDR 40 739174 6
TXRH 23 257119 -2
AAXN 16 250261 -3
GLOB 14 63286 -6
Average 23.25 327460 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $327 million. That figure was $108 million in LHCG’s case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand Globant SA (NYSE:GLOB) is the least popular one with only 14 bullish hedge fund positions. LHC Group, Inc. (NASDAQ:LHCG) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately LHCG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LHCG were disappointed as the stock returned -5% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.