Were Hedge Funds Right About Piling Into Hill-Rom Holdings, Inc. (HRC)?

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 15 S&P 500 stocks among hedge funds at the end of December 2018 yielded an average return of 19.7% year-to-date, vs. a gain of 13.1% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Hill-Rom Holdings, Inc. (NYSE:HRC).

Hill-Rom Holdings, Inc. (NYSE:HRC) was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2018. HRC investors should be aware of an increase in enthusiasm from smart money in recent months. There were 24 hedge funds in our database with HRC positions at the end of the previous quarter. Our calculations also showed that HRC isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


We’re going to take a look at the key hedge fund action regarding Hill-Rom Holdings, Inc. (NYSE:HRC).

Heading into the first quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HRC over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).


Among these funds, Fisher Asset Management held the most valuable stake in Hill-Rom Holdings, Inc. (NYSE:HRC), which was worth $116.3 million at the end of the third quarter. On the second spot was Millennium Management which amassed $112.3 million worth of shares. Moreover, Select Equity Group, Renaissance Technologies, and Alyeska Investment Group were also bullish on Hill-Rom Holdings, Inc. (NYSE:HRC), allocating a large percentage of their portfolios to this stock.

Now, key money managers have jumped into Hill-Rom Holdings, Inc. (NYSE:HRC) headfirst. Point72 Asset Management, managed by Steve Cohen, established the most outsized position in Hill-Rom Holdings, Inc. (NYSE:HRC). Point72 Asset Management had $4.5 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $2.2 million position during the quarter. The other funds with new positions in the stock are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Matthew Tewksbury’s Stevens Capital Management, and Ray Dalio’s Bridgewater Associates.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Hill-Rom Holdings, Inc. (NYSE:HRC) but similarly valued. These stocks are Sabre Corporation (NASDAQ:SABR), Post Holdings Inc (NYSE:POST), The Toro Company (NYSE:TTC), and Cimarex Energy Co (NYSE:XEC). This group of stocks’ market caps are similar to HRC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SABR 24 276021 -7
POST 28 1337378 -1
TTC 21 472099 0
XEC 28 1080892 5
Average 25.25 791598 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $792 million. That figure was $650 million in HRC’s case. Post Holdings Inc (NYSE:POST) is the most popular stock in this table. On the other hand The Toro Company (NYSE:TTC) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Hill-Rom Holdings, Inc. (NYSE:HRC) is more popular among hedge funds. Our calculations showed that the top 15 most popular stocks among hedge funds returned 21.3% year-to-date through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on HRC, though not to the same extent, as the stock returned 19.4% and outperformed the market as well.

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