Hedge Funds Have Never Been This Bullish On HCA Healthcare Inc (HCA)

We at Insider Monkey have gone over 821 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 March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of HCA Healthcare Inc (NYSE:HCA) based on that data.

HCA Healthcare Inc (NYSE:HCA) was in 87 hedge funds’ portfolios at the end of the first quarter of 2020. HCA has experienced an increase in hedge fund sentiment in recent months. There were 63 hedge funds in our database with HCA holdings at the end of the previous quarter. Our calculations also showed that HCA found its a place 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).

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

If you’d ask most stock holders, hedge funds are seen as unimportant, outdated investment vehicles of the past. While there are more than 8000 funds trading today, Our experts hone in on the aristocrats of this club, approximately 850 funds. These money managers manage the majority of all hedge funds’ total asset base, and by following their first-class stock picks, Insider Monkey has formulated many investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually 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 .


Larry Robbins of Glenview Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 check out the fresh hedge fund action surrounding HCA Healthcare Inc (NYSE:HCA).

Hedge fund activity in HCA Healthcare Inc (NYSE:HCA)

Heading into the second quarter of 2020, a total of 87 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from the previous quarter. By comparison, 51 hedge funds held shares or bullish call options in HCA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HCA A Good Stock To Buy?

According to Insider Monkey’s hedge fund database, Larry Robbins’s Glenview Capital has the largest position in HCA Healthcare Inc (NYSE:HCA), worth close to $252.7 million, accounting for 6.9% of its total 13F portfolio. Coming in second is Andrew Wellington and Jeff Keswin of Lyrical Asset Management, with a $237.4 million position; 5.8% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish comprise Ken Griffin’s Citadel Investment Group, Glenn Greenberg’s Brave Warrior Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Abrams Bison Investments allocated the biggest weight to HCA Healthcare Inc (NYSE:HCA), around 12.25% of its 13F portfolio. Solel Partners is also relatively very bullish on the stock, earmarking 11.7 percent of its 13F equity portfolio to HCA.

As industrywide interest jumped, specific money managers have been driving this bullishness. Brave Warrior Capital, managed by Glenn Greenberg, created the most outsized position in HCA Healthcare Inc (NYSE:HCA). Brave Warrior Capital had $124.2 million invested in the company at the end of the quarter. Anthony Bozza’s Lakewood Capital Management also initiated a $62.2 million position during the quarter. The other funds with brand new HCA positions are Farhad Nanji and Michael DeMichele’s MFN Partners, Gavin M. Abrams’s Abrams Bison Investments, and Kevin D. Eng’s Columbus Hill Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to HCA Healthcare Inc (NYSE:HCA). These stocks are SBA Communications Corporation (NASDAQ:SBAC), Monster Beverage Corp (NASDAQ:MNST), The Kraft Heinz Company (NASDAQ:KHC), and General Motors Company (NYSE:GM). This group of stocks’ market values resemble HCA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SBAC 46 1835315 1
MNST 43 1843978 -2
KHC 39 8314956 5
GM 53 3020405 -22
Average 45.25 3753664 -4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 45.25 hedge funds with bullish positions and the average amount invested in these stocks was $3754 million. That figure was $2171 million in HCA’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand The Kraft Heinz Company (NASDAQ:KHC) is the least popular one with only 39 bullish hedge fund positions. Compared to these stocks HCA Healthcare Inc (NYSE:HCA) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on HCA, though not to the same extent, as the stock returned 19% in Q2 (through the end of May) and outperformed the market as well.

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