Were Hedge Funds Right About Anthem Inc (ANTM)?

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s analyze whether Anthem Inc (NYSE:ANTM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

Anthem Inc (NYSE:ANTM) investors should be aware of an increase in support from the world’s most elite money managers lately. ANTM was in 71 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 64 hedge funds in our database with ANTM holdings at the end of the previous quarter. Our calculations also showed that ANTM isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Andreas Halvorsen

Andreas Halvorsen of Viking Global

We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations We are probably at the peak of the COVID-19 pandemic, so we check out this biotech investor’s coronavirus picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the new hedge fund action surrounding Anthem Inc (NYSE:ANTM).

What does smart money think about Anthem Inc (NYSE:ANTM)?

At the end of the fourth quarter, a total of 71 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ANTM over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ANTM A Good Stock To Buy?

When looking at the institutional investors followed by Insider Monkey, Andreas Halvorsen’s Viking Global has the largest position in Anthem Inc (NYSE:ANTM), worth close to $932.1 million, amounting to 4.4% of its total 13F portfolio. On Viking Global’s heels is William B. Gray of Orbis Investment Management, with a $694 million position; 4.8% of its 13F portfolio is allocated to the company. Other professional money managers that hold long positions consist of Farallon Capital, Cliff Asness’s AQR Capital Management and Larry Robbins’s Glenview Capital. In terms of the portfolio weights assigned to each position Crake Asset Management allocated the biggest weight to Anthem Inc (NYSE:ANTM), around 15.16% of its 13F portfolio. Thunderbird Partners is also relatively very bullish on the stock, setting aside 12.79 percent of its 13F equity portfolio to ANTM.

Consequently, specific money managers have jumped into Anthem Inc (NYSE:ANTM) headfirst. Suvretta Capital Management, managed by Aaron Cowen, initiated the most outsized position in Anthem Inc (NYSE:ANTM). Suvretta Capital Management had $124.4 million invested in the company at the end of the quarter. David Fear’s Thunderbird Partners also initiated a $79.5 million position during the quarter. The following funds were also among the new ANTM investors: Martin Taylor’s Crake Asset Management, Christopher James’s Partner Fund Management, and Anthony Bozza’s Lakewood Capital Management.

Let’s check out hedge fund activity in other stocks similar to Anthem Inc (NYSE:ANTM). These stocks are Cigna Corporation (NYSE:CI), Truist Financial Corporation (NYSE:TFC), Tesla Inc. (NASDAQ:TSLA), and CNOOC Limited (NYSE:CEO). This group of stocks’ market values are similar to ANTM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CI 72 4118635 7
TFC 35 875715 4
TSLA 51 3043687 19
CEO 14 235359 -1
Average 43 2068349 7.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $2068 million. That figure was $4834 million in ANTM’s case. Cigna Corporation (NYSE:CI) is the most popular stock in this table. On the other hand CNOOC Limited (NYSE:CEO) is the least popular one with only 14 bullish hedge fund positions. Anthem Inc (NYSE:ANTM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 1.0% in 2020 through April 20th but beat the market by 11 percentage points. Unfortunately ANTM wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ANTM were disappointed as the stock returned -12.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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