Hedge Funds Are Piling Into Chemed Corporation (CHE)

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Chemed Corporation (NYSE:CHE) based on that data.

Is Chemed Corporation (NYSE:CHE) a superb investment today? Hedge funds were taking a bullish view. The number of bullish hedge fund bets moved up by 6 recently. Chemed Corporation (NYSE:CHE) was in 30 hedge funds’ portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that CHE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 24 hedge funds in our database with CHE positions at the end of the first quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Keeping this in mind we’re going to take a gander at the fresh hedge fund action regarding Chemed Corporation (NYSE:CHE).

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

At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the first quarter of 2020. On the other hand, there were a total of 26 hedge funds with a bullish position in CHE a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of Chemed Corporation (NYSE:CHE), with a stake worth $74.2 million reported as of the end of June. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $67.8 million. AQR Capital Management, GAMCO Investors, and Woodline Partners 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 Intrinsic Edge Capital allocated the biggest weight to Chemed Corporation (NYSE:CHE), around 0.42% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, setting aside 0.39 percent of its 13F equity portfolio to CHE.

Consequently, some big names have been driving this bullishness. Woodline Partners, managed by Michael Rockefeller and KarláKroeker, initiated the biggest position in Chemed Corporation (NYSE:CHE). Woodline Partners had $15.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $15 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Mark Coe’s Intrinsic Edge Capital, and D. E. Shaw’s D E Shaw.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Chemed Corporation (NYSE:CHE) but similarly valued. We will take a look at Ternium S.A. (NYSE:TX), Hill-Rom Holdings, Inc. (NYSE:HRC), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), SiteOne Landscape Supply, Inc. (NYSE:SITE), Starwood Property Trust, Inc. (NYSE:STWD), Alaska Air Group, Inc. (NYSE:ALK), and FirstService Corporation (NASDAQ:FSV). This group of stocks’ market values resemble CHE’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $290 million. That figure was $314 million in CHE’s case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Starwood Property Trust, Inc. (NYSE:STWD) is the least popular one with only 11 bullish hedge fund positions. Chemed Corporation (NYSE:CHE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CHE is 71.7. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately CHE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CHE were disappointed as the stock returned -9.3% since the end of June (through 10/15) 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.