Is BHC A Good Stock To Buy Now?

With the third-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 fourth quarter. One of these stocks was Bausch Health Companies Inc. (NYSE:BHC).

Is BHC a good stock to buy now? Bausch Health Companies Inc. (NYSE:BHC) has experienced an increase in support from the world’s most elite money managers lately. Bausch Health Companies Inc. (NYSE:BHC) was in 40 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 41. There were 35 hedge funds in our database with BHC positions at the end of the second quarter. Our calculations also showed that BHC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most market participants, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our experts choose to focus on the masters of this group, around 850 funds. Most estimates calculate that this group of people watch over the majority of all hedge funds’ total capital, and by shadowing their highest performing stock picks, Insider Monkey has discovered many investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced 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 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .


John Paulson of Paulson & Co

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Now let’s check out the key hedge fund action surrounding Bausch Health Companies Inc. (NYSE:BHC).

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

Heading into the fourth quarter of 2020, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BHC over the last 21 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Bausch Health Companies Inc. (NYSE:BHC) was held by Paulson & Co, which reported holding $401.5 million worth of stock at the end of September. It was followed by ValueAct Capital with a $278.7 million position. Other investors bullish on the company included Glenview Capital, GoldenTree Asset Management, and Permian Investment Partners. In terms of the portfolio weights assigned to each position Chou Associates Management allocated the biggest weight to Bausch Health Companies Inc. (NYSE:BHC), around 22.77% of its 13F portfolio. Permian Investment Partners is also relatively very bullish on the stock, earmarking 15.74 percent of its 13F equity portfolio to BHC.

As aggregate interest increased, key money managers have jumped into Bausch Health Companies Inc. (NYSE:BHC) headfirst. Camber Capital Management, managed by Stephen DuBois, created the biggest position in Bausch Health Companies Inc. (NYSE:BHC). Camber Capital Management had $69.9 million invested in the company at the end of the quarter. Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors also initiated a $46.7 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Mark Lee’s Mountaineer Partners Management, and Bhagwan Jay Rao’s Integral Health Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Bausch Health Companies Inc. (NYSE:BHC) but similarly valued. We will take a look at ANGI Homeservices Inc (NASDAQ:ANGI), Hanesbrands Inc. (NYSE:HBI), Emergent Biosolutions Inc (NYSE:EBS), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Leggett & Platt, Inc. (NYSE:LEG), Clearway Energy, Inc. (NYSE:CWEN), and Yamana Gold Inc. (NYSE:AUY). This group of stocks’ market caps are similar to BHC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ANGI 42 348795 -6
HBI 36 771352 5
EBS 22 151540 1
LECO 24 266760 2
LEG 26 135068 -3
CWEN 19 256069 0
AUY 17 296964 -1
Average 26.6 318078 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $1604 million in BHC’s case. ANGI Homeservices Inc (NASDAQ:ANGI) is the most popular stock in this table. On the other hand Yamana Gold Inc. (NYSE:AUY) is the least popular one with only 17 bullish hedge fund positions. Bausch Health Companies Inc. (NYSE:BHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BHC is 85.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on BHC as the stock returned 32.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Bausch Health Companies Inc. (NYSE:BHC)

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