Hedge Funds Are Dipping Their Toes Back Into Sabra Health Care REIT Inc (SBRA)

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Sabra Health Care REIT Inc (NASDAQ:SBRA) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Sabra Health Care REIT Inc (NASDAQ:SBRA) shareholders have witnessed an increase in hedge fund sentiment lately. Sabra Health Care REIT Inc (NASDAQ:SBRA) was in 18 hedge funds’ portfolios at the end of June. The all time high for this statistics is 27. There were 17 hedge funds in our database with SBRA holdings at the end of March. Our calculations also showed that SBRA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are plenty of indicators stock traders put to use to grade publicly traded companies. A duo of the most useful indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outpace their index-focused peers by a solid amount (see the details here).

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now we’re going to take a look at the latest hedge fund action surrounding Sabra Health Care REIT Inc (NASDAQ:SBRA).

Hedge fund activity in Sabra Health Care REIT Inc (NASDAQ:SBRA)

Heading into the third quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SBRA over the last 20 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

More specifically, Long Pond Capital was the largest shareholder of Sabra Health Care REIT Inc (NASDAQ:SBRA), with a stake worth $108 million reported as of the end of September. Trailing Long Pond Capital was Arrowstreet Capital, which amassed a stake valued at $18.3 million. Forward Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Long Pond Capital allocated the biggest weight to Sabra Health Care REIT Inc (NASDAQ:SBRA), around 4.26% of its 13F portfolio. Forward Management is also relatively very bullish on the stock, setting aside 2.09 percent of its 13F equity portfolio to SBRA.

Now, specific money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in Sabra Health Care REIT Inc (NASDAQ:SBRA). Point72 Asset Management had $1.7 million invested in the company at the end of the quarter. Parvinder Thiara’s Athanor Capital also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new SBRA investors: Israel Englander’s Millennium Management, Dov Gertzulin’s DG Capital Management, and Donald Sussman’s Paloma Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Sabra Health Care REIT Inc (NASDAQ:SBRA) but similarly valued. These stocks are Atlantica Sustainable Infrastructure plc (NASDAQ:AY), Grupo Televisa SAB (NYSE:TV), Radian Group Inc (NYSE:RDN), JetBlue Airways Corporation (NASDAQ:JBLU), Safehold Inc. (NYSE:SAFE), Eagle Materials, Inc. (NYSE:EXP), and Verint Systems Inc. (NASDAQ:VRNT). This group of stocks’ market valuations match SBRA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AY 12 76409 -1
TV 21 426090 2
RDN 33 190994 5
JBLU 28 131834 -8
SAFE 7 7836 2
EXP 41 428808 7
VRNT 25 333301 8
Average 23.9 227896 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $161 million in SBRA’s case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 7 bullish hedge fund positions. Sabra Health Care REIT Inc (NASDAQ:SBRA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SBRA is 42.2. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately SBRA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SBRA investors were disappointed as the stock returned -2.5% in 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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