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Hedge Funds Have Never Been This Bullish On Senior Housing Properties Trust (SNH)

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 have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Senior Housing Properties Trust (NYSE:SNH) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is Senior Housing Properties Trust (NYSE:SNH) a buy, sell, or hold? Money managers are in a bullish mood. The number of bullish hedge fund bets inched up by 8 in recent months. Our calculations also showed that SNH isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bruce Kovner, Caxton Associates LP

Let’s analyze the key hedge fund action surrounding Senior Housing Properties Trust (NYSE:SNH).

How are hedge funds trading Senior Housing Properties Trust (NYSE:SNH)?

Heading into the first quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 62% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in SNH a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

SNH_apr2019

More specifically, Millennium Management was the largest shareholder of Senior Housing Properties Trust (NYSE:SNH), with a stake worth $19.2 million reported as of the end of December. Trailing Millennium Management was D E Shaw, which amassed a stake valued at $15.8 million. Balyasny Asset Management, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Senior Housing Properties Trust (NYSE:SNH). Arrowstreet Capital had $5.5 million invested in the company at the end of the quarter. Bruce Kovner’s Caxton Associates LP also initiated a $1 million position during the quarter. The following funds were also among the new SNH investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Paul Tudor Jones’s Tudor Investment Corp, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Senior Housing Properties Trust (NYSE:SNH) but similarly valued. These stocks are Adtalem Global Education Inc. (NYSE:ATGE), Taubman Centers, Inc. (NYSE:TCO), Manhattan Associates, Inc. (NASDAQ:MANH), and Clean Harbors Inc (NYSE:CLH). This group of stocks’ market caps resemble SNH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATGE 20 177763 4
TCO 20 170900 0
MANH 20 240659 -3
CLH 23 235723 5
Average 20.75 206261 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $85 million in SNH’s case. Clean Harbors Inc (NYSE:CLH) is the most popular stock in this table. On the other hand Adtalem Global Education Inc. (NYSE:ATGE) is the least popular one with only 20 bullish hedge fund positions. Senior Housing Properties Trust (NYSE:SNH) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SNH wasn’t nearly as popular as these 15 stock and hedge funds that were betting on SNH were disappointed as the stock returned -28.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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