Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Anthem Inc (NYSE:ANTM) changed recently.
Is Anthem (ANTM) stock a buy or sell? Prominent investors were turning bullish. The number of bullish hedge fund positions improved by 5 in recent months. Anthem Inc (NYSE:ANTM) was in 70 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 73. Our calculations also showed that ANTM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best cheap stocks to buy now to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind we’re going to review the key hedge fund action regarding Anthem Inc (NYSE:ANTM).
Do Hedge Funds Think ANTM Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 70 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the third quarter of 2020. By comparison, 71 hedge funds held shares or bullish call options in ANTM a year ago. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the largest position in Anthem Inc (NYSE:ANTM). Orbis Investment Management has a $959 million position in the stock, comprising 6.9% of its 13F portfolio. The second largest stake is held by Boykin Curry of Eagle Capital Management, with a $787.6 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Farallon Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Glenn Greenberg’s Brave Warrior Capital. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Anthem Inc (NYSE:ANTM), around 9.11% of its 13F portfolio. MIC Capital Partners is also relatively very bullish on the stock, setting aside 7.48 percent of its 13F equity portfolio to ANTM.
As aggregate interest increased, specific money managers were breaking ground themselves. OrbiMed Advisors, founded by Samuel Isaly, initiated the most valuable position in Anthem Inc (NYSE:ANTM). OrbiMed Advisors had $99.7 million invested in the company at the end of the quarter. Jeremy Green’s Redmile Group also made a $78.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Bob Peck and Andy Raab’s FPR Partners, Larry Robbins’s Glenview Capital, and Kamran Moghtaderi’s Eversept Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Anthem Inc (NYSE:ANTM) but similarly valued. We will take a look at Snowflake Inc (NYSE:SNOW), S&P Global Inc. (NYSE:SPGI), Applied Materials, Inc. (NASDAQ:AMAT), Zoetis Inc (NYSE:ZTS), Canadian National Railway Company (NYSE:CNI), Altria Group Inc (NYSE:MO), and Fiserv, Inc. (NASDAQ:FISV). This group of stocks’ market valuations match ANTM’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 59 hedge funds with bullish positions and the average amount invested in these stocks was $3715 million. That figure was $5187 million in ANTM’s case. Fiserv, Inc. (NASDAQ:FISV) is the most popular stock in this table. On the other hand Canadian National Railway Company (NYSE:CNI) is the least popular one with only 31 bullish hedge fund positions. Anthem Inc (NYSE:ANTM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANTM is 69.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ANTM as the stock returned 6.4% since the end of Q4 (through 3/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.