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Is Hill-Rom Holdings, Inc. (HRC) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Hill-Rom Holdings, Inc. (NYSE:HRC).

Hill-Rom Holdings, Inc. (NYSE:HRC) has experienced an increase in enthusiasm from smart money lately. HRC was in 24 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with HRC positions at the end of the previous quarter. Our calculations also showed that HRC isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Ken Fisher FISHER ASSET MANAGEMENT

We’re going to take a peek at the new hedge fund action regarding Hill-Rom Holdings, Inc. (NYSE:HRC).

How have hedgies been trading Hill-Rom Holdings, Inc. (NYSE:HRC)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in HRC heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HRC_dec2018

More specifically, Fisher Asset Management was the largest shareholder of Hill-Rom Holdings, Inc. (NYSE:HRC), with a stake worth $123.3 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $108.1 million. Healthcor Management LP, Citadel Investment Group, and Alyeska Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers were breaking ground themselves. Healthcor Management LP, managed by Arthur B Cohen and Joseph Healey, assembled the most outsized position in Hill-Rom Holdings, Inc. (NYSE:HRC). Healthcor Management LP had $76.3 million invested in the company at the end of the quarter. Robert Joseph Caruso’s Select Equity Group also initiated a $29 million position during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s also examine hedge fund activity in other stocks similar to Hill-Rom Holdings, Inc. (NYSE:HRC). We will take a look at Insulet Corporation (NASDAQ:PODD), Liberty Property Trust (NYSE:LPT), Methanex Corporation (NASDAQ:MEOH), and BWX Technologies Inc (NYSE:BWXT). All of these stocks’ market caps are similar to HRC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PODD 22 471669 -2
LPT 18 400987 -3
MEOH 21 301336 3
BWXT 17 205166 -6
Average 19.5 344790 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $345 million. That figure was $662 million in HRC’s case. Insulet Corporation (NASDAQ:PODD) is the most popular stock in this table. On the other hand BWX Technologies Inc (NYSE:BWXT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Hill-Rom Holdings, Inc. (NYSE:HRC) 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.

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

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