Is BHC Stock A Buy or Sell?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Bausch Health Companies (NYSE:BHC) based on that data.

Is BHC stock a buy or sell? Bausch Health Companies (NYSE:BHC) has experienced an increase in support from the world’s most elite money managers lately. Bausch Health Companies (NYSE:BHC) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic is 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 40 hedge funds in our database with BHC positions at the end of the third quarter. Our calculations also showed that BHC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

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

Heading into the first quarter of 2021, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BHC over the last 22 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 BHC A Good Stock To Buy?

The largest stake in Bausch Health Companies (NYSE:BHC) was held by Paulson & Co, which reported holding $537.5 million worth of stock at the end of December. It was followed by ValueAct Capital with a $373.2 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 (NYSE:BHC), around 23.52% of its 13F portfolio. Permian Investment Partners is also relatively very bullish on the stock, dishing out 17.78 percent of its 13F equity portfolio to BHC.

Now, key money managers have been driving this bullishness. Icahn Capital LP, managed by Carl Icahn, initiated the most valuable position in Bausch Health Companies (NYSE:BHC). Icahn Capital LP had $104.7 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $8.1 million position during the quarter. The following funds were also among the new BHC investors: Wayne Cooperman’s Cobalt Capital Management, Dan Rasmussen’s Verdad Advisers, and Richard Schimel and Lawrence Sapanski’s Cinctive Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Bausch Health Companies (NYSE:BHC). These stocks are US Foods Holding Corp. (NYSE:USFD), Arrow Electronics, Inc. (NYSE:ARW), Allakos Inc. (NASDAQ:ALLK), argenx SE (NASDAQ:ARGX), UGI Corp (NYSE:UGI), Under Armour Inc (NYSE:UA), and Pan American Silver Corp. (NASDAQ:PAAS). This group of stocks’ market caps are closest to BHC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
USFD 44 1242823 3
ARW 27 764402 -1
ALLK 11 558097 2
ARGX 22 1363063 0
UGI 25 181156 2
UA 47 1451753 -1
PAAS 27 466677 -1
Average 29 861139 0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $861 million. That figure was $2466 million in BHC’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Allakos Inc. (NASDAQ:ALLK) is the least popular one with only 11 bullish hedge fund positions. Bausch Health Companies (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 82.4. 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 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on BHC as the stock returned 58.7% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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