The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 887 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31st holdings, data that is available nowhere else. Should you consider Chemed Corporation (NYSE:CHE) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is CHE stock a buy? Chemed Corporation (NYSE:CHE) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. Chemed Corporation (NYSE:CHE) was in 31 hedge funds’ portfolios at the end of December. The all time high for this statistic is 34. Our calculations also showed that CHE 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).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. With all of this in mind let’s take a look at the recent hedge fund action encompassing Chemed Corporation (NYSE:CHE).
Do Hedge Funds Think CHE Is A Good Stock To Buy Now?
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CHE 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.
Among these funds, Renaissance Technologies held the most valuable stake in Chemed Corporation (NYSE:CHE), which was worth $139 million at the end of the fourth quarter. On the second spot was Fisher Asset Management which amassed $93.5 million worth of shares. Citadel Investment Group, GAMCO Investors, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Miura Global Management allocated the biggest weight to Chemed Corporation (NYSE:CHE), around 1.51% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, designating 0.44 percent of its 13F equity portfolio to CHE.
Because Chemed Corporation (NYSE:CHE) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that slashed their positions entirely in the fourth quarter. At the top of the heap, Sander Gerber’s Hudson Bay Capital Management dropped the biggest investment of the 750 funds watched by Insider Monkey, valued at about $14.4 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund sold off about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the fourth quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Chemed Corporation (NYSE:CHE) but similarly valued. We will take a look at Natera Inc (NASDAQ:NTRA), Iron Mountain Incorporated (NYSE:IRM), Service Corporation International (NYSE:SCI), Smartsheet Inc. (NYSE:SMAR), Ozon Holdings PLC (NASDAQ:OZON), RenaissanceRe Holdings Ltd. (NYSE:RNR), and Lamar Advertising Company (NASDAQ:LAMR). This group of stocks’ market caps are similar to CHE’s market cap.
|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 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $732 million. That figure was $428 million in CHE’s case. Natera Inc (NASDAQ:NTRA) is the most popular stock in this table. On the other hand Iron Mountain Incorporated (NYSE:IRM) is the least popular one with only 18 bullish hedge fund positions. Chemed Corporation (NYSE:CHE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CHE is 52.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.2% in 2021 through April 12th and surpassed the market again by 1.5 percentage points. Unfortunately CHE wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); CHE investors were disappointed as the stock returned -12.1% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.