Should I Buy Five Star Senior Living Inc. (FVE)?

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 at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Five Star Senior Living Inc. (NYSE:FVE).

Is Five Star Senior Living Inc. (NYSE:FVE) ready to rally soon? Investors who are in the know were buying. The number of bullish hedge fund positions rose by 1 lately. Five Star Senior Living Inc. (NYSE:FVE) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. Our calculations also showed that FVE 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.

According to most traders, hedge funds are perceived as slow, outdated financial tools of the past. While there are over 8000 funds in operation at present, Our researchers look at the top tier of this club, about 850 funds. It is estimated that this group of investors watch over the majority of the hedge fund industry’s total capital, and by watching their unrivaled picks, Insider Monkey has brought to light many investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .


Jim Simons of Renaissance Technologies

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. With all of this in mind let’s take a peek at the latest hedge fund action encompassing Five Star Senior Living Inc. (NYSE:FVE).

What have hedge funds been doing with Five Star Senior Living Inc. (NYSE:FVE)?

At third quarter’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in FVE a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Is FVE A Good Stock To Buy?

The largest stake in Five Star Senior Living Inc. (NYSE:FVE) was held by V3 Capital, which reported holding $7.8 million worth of stock at the end of September. It was followed by Madison Avenue Partners with a $6.5 million position. Other investors bullish on the company included Newtyn Management, Alta Fundamental Advisers, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Alta Fundamental Advisers allocated the biggest weight to Five Star Senior Living Inc. (NYSE:FVE), around 3.17% of its 13F portfolio. Madison Avenue Partners is also relatively very bullish on the stock, dishing out 2.35 percent of its 13F equity portfolio to FVE.

As industrywide interest jumped, key hedge funds have jumped into Five Star Senior Living Inc. (NYSE:FVE) headfirst. Alta Fundamental Advisers, managed by Jeremy Carton and Gilbert Li, established the most valuable position in Five Star Senior Living Inc. (NYSE:FVE). Alta Fundamental Advisers had $3 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Five Star Senior Living Inc. (NYSE:FVE). We will take a look at Timkensteel Corp (NYSE:TMST), Electrameccanica Vehicles Corp. (NASDAQ:SOLO), Weyco Group, Inc. (NASDAQ:WEYS), Aptinyx Inc. (NASDAQ:APTX), Premier Financial Bancorp, Inc. (NASDAQ:PFBI), CTI Biopharma Corp. (NASDAQ:CTIC), and Montage Resources Corp (NYSE:MR). This group of stocks’ market values are closest to FVE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TMST 12 9445 0
SOLO 3 1006 0
WEYS 3 3042 -1
APTX 7 36093 -1
PFBI 4 3181 2
CTIC 6 48701 -3
MR 14 15153 3
Average 7 16660 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $24 million in FVE’s case. Montage Resources Corp (NYSE:MR) is the most popular stock in this table. On the other hand Electrameccanica Vehicles Corp. (NASDAQ:SOLO) is the least popular one with only 3 bullish hedge fund positions. Five Star Senior Living Inc. (NYSE:FVE) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FVE is 34.6. 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. Our calculations showed that top 20 most popular stocks among hedge funds 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 November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on FVE as the stock returned 20.3% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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