Is THC Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Tenet Healthcare Corp (NYSE:THC).

Is THC stock a buy? The smart money was betting on the stock. The number of long hedge fund positions increased by 1 in recent months. Tenet Healthcare Corp (NYSE:THC) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 44. Our calculations also showed that THC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 33 hedge funds in our database with THC holdings at the end of September.

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, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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 we’re going to take a glance at the latest hedge fund action regarding Tenet Healthcare Corp (NYSE:THC).

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

Heading into the first quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in THC a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

The largest stake in Tenet Healthcare Corp (NYSE:THC) was held by Glenview Capital, which reported holding $729.1 million worth of stock at the end of December. It was followed by Camber Capital Management with a $119.8 million position. Other investors bullish on the company included Nut Tree Capital, Citadel Investment Group, and Partner Fund Management. In terms of the portfolio weights assigned to each position Glenview Capital allocated the biggest weight to Tenet Healthcare Corp (NYSE:THC), around 16.72% of its 13F portfolio. Nut Tree Capital is also relatively very bullish on the stock, setting aside 12.49 percent of its 13F equity portfolio to THC.

Now, key hedge funds were breaking ground themselves. Sivik Global Healthcare, managed by Krishen Sud, assembled the most valuable position in Tenet Healthcare Corp (NYSE:THC). Sivik Global Healthcare had $6.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $5.6 million investment in the stock during the quarter. The following funds were also among the new THC investors: Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Michael Rockefeller and Karl Kroeker’s Woodline Partners, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Tenet Healthcare Corp (NYSE:THC) but similarly valued. These stocks are United Bankshares, Inc. (NASDAQ:UBSI), Clean Harbors Inc (NYSE:CLH), SYNNEX Corporation (NYSE:SNX), HollyFrontier Corporation (NYSE:HFC), PNM Resources, Inc. (NYSE:PNM), PTC Therapeutics, Inc. (NASDAQ:PTCT), and LivePerson, Inc. (NASDAQ:LPSN). This group of stocks’ market valuations resemble THC’s market valuation.

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As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $385 million. That figure was $1211 million in THC’s case. LivePerson, Inc. (NASDAQ:LPSN) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Tenet Healthcare Corp (NYSE:THC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for THC is 77.3. 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. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on THC as the stock returned 28.2% since the end of Q4 (through 4/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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