Is HCP, Inc. (NYSE:HCP) the right pick for your portfolio? Prominent investors are selling. The number of bullish hedge fund bets retreated by 1 lately.
In the eyes of most investors, hedge funds are seen as slow, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey choose to focus on the leaders of this group, about 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds’ total asset base, and by keeping an eye on their highest performing investments, we have found a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as important, bullish insider trading activity is a second way to break down the marketplace. Just as you’d expect, there are plenty of incentives for an insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the useful potential of this tactic if you know where to look (learn more here).
With all of this in mind, we’re going to take a glance at the latest action surrounding HCP, Inc. (NYSE:HCP).
Hedge fund activity in HCP, Inc. (NYSE:HCP)
Heading into Q2, a total of 20 of the hedge funds we track were bullish in this stock, a change of -5% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.
When looking at the hedgies we track, Jeffrey Furber’s AEW Capital Management had the biggest position in HCP, Inc. (NYSE:HCP), worth close to $206.9 million, accounting for 5.1% of its total 13F portfolio. Coming in second is Jim Simons of Renaissance Technologies, with a $62.9 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and Phill Gross and Robert Atchinson’s Adage Capital Management.
Due to the fact that HCP, Inc. (NYSE:HCP) has experienced a declination in interest from the smart money, we can see that there were a few hedgies that decided to sell off their entire stakes at the end of the first quarter. Intriguingly, Sander Gerber’s Hudson Bay Capital Management sold off the biggest investment of all the hedgies we monitor, valued at an estimated $2.3 million in call options. Anil Stevens and Glenn Shapiro’s fund, Parameter Capital Management, also sold off its stock, about $1.8 million worth. These transactions are interesting, as total hedge fund interest dropped by 1 funds at the end of the first quarter.
What do corporate executives and insiders think about HCP, Inc. (NYSE:HCP)?
Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past six months. Over the latest 180-day time period, HCP, Inc. (NYSE:HCP) has seen zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to HCP, Inc. (NYSE:HCP). These stocks are Healthcare Realty Trust Inc (NYSE:HR), Healthcare Trust Of America Inc (NYSE:HTA), Omega Healthcare Investors Inc (NYSE:OHI), Health Care REIT, Inc. (NYSE:HCN), and Ventas, Inc. (NYSE:VTR). This group of stocks belong to the reit – healthcare facilities industry and their market caps are closest to HCP’s market cap.