Smart Money Standing Pat On Five Star Quality Care, Inc. (FVE)

Insider Monkey recently finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. What do these smart investors think about Five Star Quality Care, Inc. (NYSE:FVE)? Let’s take a look.

Five Star Quality Care, Inc. (NYSE:FVE) was in 12 hedge funds’ portfolios at the end of September. Five Star Quality Care shareholders have witnessed steady activity from the world’s largest hedge funds recently. There were also 12 hedge funds in our database with Five Star Quality Care holdings at the end of the previous quarter. At the end of this article we will also compare FVE to other stocks, including Exa Corp (NASDAQ:EXA), ASA Gold and Precious Metals Ltd (NYSE:ASA), and Gaiam, Inc. (NASDAQ:GAIA) to get a better sense of its popularity.

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If you’d ask most traders, hedge funds are viewed as underperforming, old financial vehicles of yesteryear. While there are over 8,000 funds with their doors open today, our experts choose to focus on the bigwigs of this group, around 700 funds. These money managers oversee most of the hedge fund industry’s total asset base, and by paying attention to their matchless equity investments, Insider Monkey has uncovered a few investment strategies that have historically beaten the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to take a look at the recent action encompassing Five Star Quality Care, Inc. (NYSE:FVE).

Hedge fund activity in Five Star Quality Care, Inc. (NYSE:FVE)

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Osmium Partners, managed by John H Lewis, holds the number one position in Five Star Quality Care, Inc. (NYSE:FVE). The fund holds a $6 million position in the stock, comprising 6.9% of its 13F portfolio. The second-most bullish fund manager is Renaissance Technologies, holding a $5.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Vishal Saluja and Pham Quang’s Endurant Capital Management, Jacob Gottlieb’s Visium Asset Management, and George McCabe’s Portolan Capital Management.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions either. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Five Star Quality Care, Inc. (NYSE:FVE) but similarly valued. These stocks are Exa Corp (NASDAQ:EXA), ASA Gold and Precious Metals Ltd (NYSE:ASA), Gaiam, Inc. (NASDAQ:GAIA), and Blue Capital Reinsurance Holdings Ltd (NYSE:BCRH). This group of stocks’ market values resemble FVE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EXA 7 20431 -1
ASA 4 19794 1
GAIA 8 35837 -1
BCRH 4 4802 0

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $27 million in Five Star Quality Care’s case. Gaiam, Inc. (NASDAQ:GAIA) is the most popular stock in this table. On the other hand ASA Gold and Precious Metals Ltd (NYSE:ASA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Five Star Quality Care, Inc. (NYSE:FVE) is more popular among elite 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, although there may not be much in the way of catalysts to drive it forward in the near-term.