Hill-Rom Holdings, Inc. (HRC): Hedge Funds Are Nibbling

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Hill-Rom Holdings, Inc. (NYSE:HRC).

Hill-Rom Holdings, Inc. (NYSE:HRC) has seen an increase in enthusiasm from smart money lately. Hill-Rom Holdings, Inc. (NYSE:HRC) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that HRC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are a lot of signals market participants use to appraise their holdings. Some of the less utilized signals are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outclass their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Steven Cohen of Point72 Asset Management

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

At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HRC over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HRC A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of Hill-Rom Holdings, Inc. (NYSE:HRC), with a stake worth $80.7 million reported as of the end of March. Trailing Citadel Investment Group was Fisher Asset Management, which amassed a stake valued at $76 million. Arrowstreet Capital, Point72 Asset Management, and AQR Capital Management 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 Sio Capital allocated the biggest weight to Hill-Rom Holdings, Inc. (NYSE:HRC), around 2.41% of its 13F portfolio. Sivik Global Healthcare is also relatively very bullish on the stock, dishing out 1.41 percent of its 13F equity portfolio to HRC.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Deerfield Management, managed by James E. Flynn, assembled the most valuable position in Hill-Rom Holdings, Inc. (NYSE:HRC). Deerfield Management had $30.9 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $15.2 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Krishen Sud’s Sivik Global Healthcare, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Hill-Rom Holdings, Inc. (NYSE:HRC) but similarly valued. We will take a look at Advanced Drainage Systems Inc. (NYSE:WMS), BRP Inc. (NASDAQ:DOOO), Euronet Worldwide, Inc. (NASDAQ:EEFT), Targa Resources Corp (NYSE:TRGP), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Tripadvisor Inc (NASDAQ:TRIP), and Phillips 66 Partners LP (NYSE:PSXP). This group of stocks’ market caps resemble HRC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WMS 29 1220549 4
DOOO 17 196834 2
EEFT 40 511517 8
TRGP 24 531977 -5
SPCE 17 210974 -6
TRIP 45 1975906 4
PSXP 5 45200 1
Average 25.3 670422 1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $670 million. That figure was $455 million in HRC’s case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. Hill-Rom Holdings, Inc. (NYSE:HRC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HRC is 64.7. 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 positive signal but 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately HRC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on HRC were disappointed as the stock returned 6% since the end of March (through 7/2) 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 many of these stocks already outperformed the market since 2019.

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