In this article we will check out the progression of hedge fund sentiment towards Brookdale Senior Living, Inc. (NYSE:BKD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Brookdale Senior Living, Inc. (NYSE:BKD) a good investment right now? The best stock pickers are becoming less confident. The number of long hedge fund bets went down by 5 lately. Our calculations also showed that BKD 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). BKD was in 17 hedge funds’ portfolios at the end of March. There were 22 hedge funds in our database with BKD holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are perceived as slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation at the moment, Our experts hone in on the crème de la crème of this group, about 850 funds. These hedge fund managers preside over bulk of the hedge fund industry’s total asset base, and by keeping track of their first-class equity investments, Insider Monkey has formulated several investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year 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 .
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. Keeping this in mind let’s take a gander at the latest hedge fund action regarding Brookdale Senior Living, Inc. (NYSE:BKD).
What have hedge funds been doing with Brookdale Senior Living, Inc. (NYSE:BKD)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BKD over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Deerfield Management held the most valuable stake in Brookdale Senior Living, Inc. (NYSE:BKD), which was worth $57.4 million at the end of the third quarter. On the second spot was Glenview Capital which amassed $55 million worth of shares. Camber Capital Management, Renaissance Technologies, and D E Shaw 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 North Run Capital allocated the biggest weight to Brookdale Senior Living, Inc. (NYSE:BKD), around 5.91% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, earmarking 3.17 percent of its 13F equity portfolio to BKD.
Because Brookdale Senior Living, Inc. (NYSE:BKD) has experienced a decline in interest from the smart money, it’s easy to see that there was a specific group of funds that decided to sell off their entire stakes in the first quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group cut the largest investment of all the hedgies tracked by Insider Monkey, totaling close to $1.8 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $1.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Brookdale Senior Living, Inc. (NYSE:BKD). We will take a look at Cornerstone Building Brands, Inc. (NYSE:CNR), OFG Bancorp (NYSE:OFG), Archrock, Inc. (NYSE:AROC), and Blucora Inc (NASDAQ:BCOR). All of these stocks’ market caps are similar to BKD’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $236 million in BKD’s case. Cornerstone Building Brands, Inc. (NYSE:CNR) is the most popular stock in this table. On the other hand Archrock, Inc. (NYSE:AROC) is the least popular one with only 11 bullish hedge fund positions. Brookdale Senior Living, Inc. (NYSE:BKD) 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 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately BKD wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BKD were disappointed as the stock returned -11.4% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.