How Five Star Quality Care, Inc. (FVE) Stacks Up Against Its Peers

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Five Star Quality Care, Inc. (NASDAQ:FVE).

Five Star Quality Care, Inc. (NASDAQ:FVE) shareholders have witnessed a decrease in hedge fund interest lately. FVE was in 8 hedge funds’ portfolios at the end of the third quarter of 2016. There were 9 hedge funds in our database with FVE holdings at the end of the second quarter. At the end of this article we will also compare FVE to other stocks including Eiger Biopharmaceuticals Inc (NASDAQ:EIGR), Hugoton Royalty Trust (NYSE:HGT), and Catabasis Pharmaceuticals Inc (NASDAQ:CATB) to get a better sense of its popularity.

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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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What have hedge funds been doing with Five Star Quality Care, Inc. (NASDAQ:FVE)?

At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, an 11% drop from the second quarter of 2016, and the fourth straight quarter with a decline in hedge fund ownership of a single hedge fund in total. The graph below displays the number of hedge funds with bullish position in FVE over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, holds the number one position in Five Star Quality Care, Inc. (NASDAQ:FVE). Renaissance Technologies has a $4.9 million position in the stock. Sitting at the No. 2 spot is Axar Capital, led by Andrew Axelrod, holding a $4.6 million position. Remaining hedge funds and institutional investors that are bullish consist of George McCabe’s Portolan Capital Management, Vishal Saluja and Pham Quang’s Endurant Capital Management, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. Interestingly, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners cashed in the largest stake of the “upper crust” of funds studied by Insider Monkey, comprising an estimated $0.1 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also sold off its stock valued at about $0.1 million.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Five Star Quality Care, Inc. (NASDAQ:FVE) but similarly valued. These stocks are Eiger Biopharmaceuticals Inc (NASDAQ:EIGR), Hugoton Royalty Trust (NYSE:HGT), Catabasis Pharmaceuticals Inc (NASDAQ:CATB), and First South Bancorp, Inc. (NASDAQ:FSBK). This group of stocks’ market caps match FVE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EIGR 5 14312 0
HGT 5 1572 1
CATB 5 18053 5
FSBK 3 6720 0

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $15 million in FVE’s case. Eiger Biopharmaceuticals Inc (NASDAQ:EIGR) is the most popular stock in this table. On the other hand First South Bancorp, Inc. (NASDAQ:FSBK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Five Star Quality Care, Inc. (NASDAQ:FVE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None