It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Cotiviti Holdings Inc(NYSE:COTV).
Is Cotiviti Holdings Inc (NYSE:COTV) going to take off soon? Prominent investors are actually taking a bearish view. The number of bullish hedge fund bets dropped by 3 recently. In this way, there were 8 hedge funds in our database with COTV holdings at the end of the last 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 EnLink Midstream LLC (NYSE:ENLC), Univar Inc (NYSE:UNVR), and EnerSys (NYSE:ENS) to gather more data points.
Follow Cotiviti Holdings Inc.
Follow Cotiviti Holdings Inc.
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.
Matej Kastelic/Shutterstock.com
How are hedge funds trading Cotiviti Holdings Inc(NYSE:COTV)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, down by 27% from the previous quarter. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Matthew A. Weatherbie’s Weatherbie Capital has the most valuable position in Cotiviti Holdings Inc(NYSE:COTV), worth close to $31.3 million, comprising 3.9% of its total 13F portfolio. The second largest stake is held by Governors Lane, led by Isaac Corre, holding a $12.4 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Joel Greenblatt’s Gotham Asset Management, Jason Young and Alfred Geary’s YG Partners and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. Interestingly, James E. Flynn’s Deerfield Management cashed in the largest stake of all the investors tracked by Insider Monkey, comprising about $19 million in stock. George Soros’ Soros Fund Management, also dropped its stock, about $3.4 million worth.
Let’s go over hedge fund activity in other stocks similar to Cotiviti Holdings Inc(NYSE:COTV). These stocks are EnLink Midstream LLC (NYSE:ENLC), Univar Inc (NYSE:UNVR), EnerSys (NYSE:ENS), and Paycom Software Inc (NYSE:PAYC). This group of stocks’ market valuations resemble COTV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENLC | 8 | 23951 | 3 |
| UNVR | 24 | 444259 | 7 |
| ENS | 21 | 58250 | -1 |
| PAYC | 18 | 134789 | -1 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $71 million in COTV’s case. Univar Inc (NYSE:UNVR) 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 Cotiviti Holdings Inc(NYSE:COTV) is even less popular than ENLC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None