The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Brookdale Senior Living, Inc. (NYSE:BKD) from the perspective of those elite funds.
Is Brookdale Senior Living, Inc. (NYSE:BKD) a sound investment today? Prominent investors are in a pessimistic mood. The number of bullish hedge fund positions shrunk by 6 recently. BKD was in 35 hedge funds’ portfolios at the end of September. There were 41 hedge funds in our database with BKD positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cantel Medical Corp. (NYSE:CMN), Catalent Inc (NYSE:CTLT), and EnLink Midstream LLC (NYSE:ENLC) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, we’re going to take a peek at the fresh action regarding Brookdale Senior Living, Inc. (NYSE:BKD).
What have hedge funds been doing with Brookdale Senior Living, Inc. (NYSE:BKD)?
Heading into the fourth quarter of 2016, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 15% from the second quarter of 2016. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Glenview Capital, managed by Larry Robbins, holds the biggest position in Brookdale Senior Living, Inc. (NYSE:BKD). The fund reportedly has a $290.2 million position in the stock, comprising 2.1% of its 13F portfolio. The second most bullish fund manager is Canyon Capital Advisors, led by Joshua Friedman and Mitchell Julis, holding a $110.8 million position; the fund has 4% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish comprise Stephen DuBois’s Camber Capital Management, Thomas Ellis and Todd Hammer’s North Run Capital and Michael Blitzer’s Kingstown Capital Management.
Due to the fact that Brookdale Senior Living, Inc. (NYSE:BKD) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there lies a certain “tier” of hedgies that slashed their entire stakes heading into Q4. It’s worth mentioning that Conan Laughlin’s North Tide Capital dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, comprising close to $50.2 million in stock. Jeremy Green’s fund, Redmile Group, also said goodbye to its holding, about $23.9 million worth of BKD shares. These bearish behaviors are important to note, as total hedge fund interest dropped by 6 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Brookdale Senior Living, Inc. (NYSE:BKD) but similarly valued. We will take a look at Cantel Medical Corp. (NYSE:CMN), Catalent Inc (NYSE:CTLT), EnLink Midstream LLC (NYSE:ENLC), and Helen of Troy Limited (NASDAQ:HELE). This group of stocks’ market caps match BKD’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $115 million. That figure was a whooping $954 million in BKD’s case. Helen of Troy Limited (NASDAQ:HELE) is the most popular stock in this table. On the other hand EnLink Midstream LLC (NYSE:ENLC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Brookdale Senior Living, Inc. (NYSE:BKD) 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.