Is LHCG A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards LHC Group, Inc. (NASDAQ:LHCG).

Is LHCG a good stock to buy now? LHC Group, Inc. (NASDAQ:LHCG) has seen a decrease in support from the world’s most elite money managers of late. LHC Group, Inc. (NASDAQ:LHCG) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 30. There were 30 hedge funds in our database with LHCG holdings at the end of June. Our calculations also showed that LHCG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are a multitude of formulas shareholders employ to appraise their holdings. A couple of the less known formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outperform the broader indices by a very impressive margin (see the details here).

Bruce Kovner, Caxton Associates LP

Bruce Kovner of Caxton Associates LPBruce Kovner

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Now let’s take a glance at the fresh hedge fund action regarding LHC Group, Inc. (NASDAQ:LHCG).

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

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -43% from the second quarter of 2020. On the other hand, there were a total of 29 hedge funds with a bullish position in LHCG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, Columbus Circle Investors held the most valuable stake in LHC Group, Inc. (NASDAQ:LHCG), which was worth $20.3 million at the end of the third quarter. On the second spot was Bayberry Capital Partners which amassed $20.1 million worth of shares. Integral Health Asset Management, PEAK6 Capital Management, and Pura Vida Investments 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 Bayberry Capital Partners allocated the biggest weight to LHC Group, Inc. (NASDAQ:LHCG), around 5.76% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, designating 4.88 percent of its 13F equity portfolio to LHCG.

Because LHC Group, Inc. (NASDAQ:LHCG) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers that elected to cut their full holdings in the third quarter. At the top of the heap, D. E. Shaw’s D E Shaw said goodbye to the largest stake of all the hedgies watched by Insider Monkey, worth about $3 million in stock. C. Jonathan Gattman’s fund, Cloverdale Capital Management, also said goodbye to its stock, about $2.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 13 funds in the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as LHC Group, Inc. (NASDAQ:LHCG) but similarly valued. We will take a look at AECOM (NYSE:ACM), Aramark (NYSE:ARMK), HD Supply Holdings Inc (NASDAQ:HDS), Carlisle Companies, Inc. (NYSE:CSL), GrubHub Inc (NYSE:GRUB), Lamar Advertising Company (REIT) (NASDAQ:LAMR), and Dolby Laboratories, Inc. (NYSE:DLB). This group of stocks’ market values are similar to LHCG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ACM 39 785085 1
ARMK 40 881207 6
HDS 41 1195088 -3
CSL 28 191780 -10
GRUB 49 1607648 -3
LAMR 37 380864 -7
DLB 35 596301 7
Average 38.4 805425 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $805 million. That figure was $78 million in LHCG’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks LHC Group, Inc. (NASDAQ:LHCG) is even less popular than CSL. Our overall hedge fund sentiment score for LHCG is 9. 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. Hedge funds dodged a bullet by taking a bearish stance towards LHCG. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th but managed to beat the market again by 15.8 percentage points. Unfortunately LHCG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); LHCG investors were disappointed as the stock returned -6.1% since the end of the third quarter (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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