Here is What Hedge Funds Think About Chemed Corporation (CHE)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Chemed Corporation (NYSE:CHE), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Chemed Corporation (NYSE:CHE) a buy here? Hedge funds were reducing their bets on the stock. The number of bullish hedge fund positions shrunk by 7 in recent months. Chemed Corporation (NYSE:CHE) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. Our calculations also showed that CHE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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Ian Wace Marshall Wace

Ian Wace of Marshall Wace

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Do Hedge Funds Think CHE Is A Good Stock To Buy Now?

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in CHE a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies has the largest position in Chemed Corporation (NYSE:CHE), worth close to $88.8 million, comprising 0.1% of its total 13F portfolio. Coming in second is Fisher Asset Management, managed by Ken Fisher, which holds a $76.5 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions consist of Ken Griffin’s Citadel Investment Group, Paul Marshall and Ian Wace’s Marshall Wace LLP and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position McKinley Capital Management allocated the biggest weight to Chemed Corporation (NYSE:CHE), around 0.4% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.23 percent of its 13F equity portfolio to CHE.

Judging by the fact that Chemed Corporation (NYSE:CHE) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who were dropping their positions entirely heading into Q2. Intriguingly, Steve Cohen’s Point72 Asset Management dumped the largest position of the 750 funds tracked by Insider Monkey, worth close to $10.9 million in stock. Pasco Alfaro and Richard Turnure’s fund, Miura Global Management, also dropped its stock, about $8 million worth. These moves are interesting, as total hedge fund interest dropped by 7 funds heading into Q2.

Let’s also examine hedge fund activity in other stocks similar to Chemed Corporation (NYSE:CHE). We will take a look at Skillz Inc. (NYSE:SKLZ), Tetra Tech, Inc. (NASDAQ:TTEK), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Donaldson Company, Inc. (NYSE:DCI), Hill-Rom Holdings, Inc. (NYSE:HRC), Advanced Drainage Systems Inc. (NYSE:WMS), and BRP Inc. (NASDAQ:DOOO). This group of stocks’ market values resemble CHE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SKLZ 26 672931 -7
TTEK 23 95089 -6
LECO 19 283252 -1
DCI 28 279375 2
HRC 30 454507 2
WMS 29 1220549 4
DOOO 17 196834 2
Average 24.6 457505 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.6 hedge funds with bullish positions and the average amount invested in these stocks was $458 million. That figure was $360 million in CHE’s case. Hill-Rom Holdings, Inc. (NYSE:HRC) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 17 bullish hedge fund positions. Chemed Corporation (NYSE:CHE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CHE is 46.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately CHE wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CHE investors were disappointed as the stock returned 2.7% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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