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Hedge Funds Have Never Been This Bullish On Cardinal Health, Inc. (CAH)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Cardinal Health, Inc. (NYSE:CAH).

Is Cardinal Health, Inc. (NYSE:CAH) a buy right now? The smart money is getting more bullish. The number of long hedge fund positions rose by 10 recently. Our calculations also showed that CAH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CAH was in 44 hedge funds’ portfolios at the end of March. There were 34 hedge funds in our database with CAH positions at the end of the previous quarter.

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

According to most shareholders, hedge funds are seen as worthless, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, We look at the crème de la crème of this group, approximately 850 funds. Most estimates calculate that this group of people orchestrate the lion’s share of all hedge funds’ total capital, and by observing their unrivaled stock picks, Insider Monkey has formulated several investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the recent hedge fund action surrounding Cardinal Health, Inc. (NYSE:CAH).

How are hedge funds trading Cardinal Health, Inc. (NYSE:CAH)?

At the end of the first quarter, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 26 hedge funds with a bullish position in CAH a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Cardinal Health, Inc. (NYSE:CAH) was held by Pzena Investment Management, which reported holding $146.3 million worth of stock at the end of September. It was followed by GLG Partners with a $79.5 million position. Other investors bullish on the company included Citadel Investment Group, D E Shaw, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Healthcare Value Capital allocated the biggest weight to Cardinal Health, Inc. (NYSE:CAH), around 6.05% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, designating 3.46 percent of its 13F equity portfolio to CAH.

As one would reasonably expect, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Cardinal Health, Inc. (NYSE:CAH). Citadel Investment Group had $76.7 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $50.1 million investment in the stock during the quarter. The following funds were also among the new CAH investors: Christopher James’s Partner Fund Management, Steve Cohen’s Point72 Asset Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Cardinal Health, Inc. (NYSE:CAH) but similarly valued. We will take a look at Campbell Soup Company (NYSE:CPB), Trip.com Group Limited (NASDAQ:TCOM), Grifols SA (NASDAQ:GRFS), and Genmab A/S (NASDAQ:GMAB). This group of stocks’ market valuations resemble CAH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CPB 40 378469 11
TCOM 31 966859 0
GRFS 23 700219 2
GMAB 14 130319 2
Average 27 543967 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $544 million. That figure was $793 million in CAH’s case. Campbell Soup Company (NYSE:CPB) is the most popular stock in this table. On the other hand Genmab A/S (NASDAQ:GMAB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Cardinal Health, Inc. (NYSE:CAH) is more popular among hedge funds. 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 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Unfortunately CAH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CAH were disappointed as the stock returned 11.8% during the second quarter (through May 22nd) 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.