Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Anthem Inc (NYSE:ANTM).
Anthem Inc (NYSE:ANTM) was in 58 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 73. ANTM shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. There were 70 hedge funds in our database with ANTM positions at the end of the fourth quarter. Our calculations also showed that ANTM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most market participants, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open today, Our researchers hone in on the upper echelon of this club, approximately 850 funds. These investment experts direct the majority of all hedge funds' total capital, and by tracking their top stock picks, Insider Monkey has identified many investment strategies that have historically outperformed the market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
William Gray of Orbis Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to go over the latest hedge fund action regarding Anthem Inc (NYSE:ANTM).
Do Hedge Funds Think ANTM Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ANTM over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Orbis Investment Management held the most valuable stake in Anthem Inc (NYSE:ANTM), which was worth $885.6 million at the end of the fourth quarter. On the second spot was Eagle Capital Management which amassed $797.2 million worth of shares. Brave Warrior Capital, Farallon Capital, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Brave Warrior Capital allocated the biggest weight to Anthem Inc (NYSE:ANTM), around 13.64% of its 13F portfolio. MIC Capital Partners is also relatively very bullish on the stock, designating 7.78 percent of its 13F equity portfolio to ANTM.
Since Anthem Inc (NYSE:ANTM) has faced declining sentiment from the smart money, we can see that there exists a select few hedgies who were dropping their entire stakes last quarter. At the top of the heap, Renaissance Technologies dumped the largest position of the "upper crust" of funds followed by Insider Monkey, totaling an estimated $76.2 million in stock, and Christopher James's Partner Fund Management was right behind this move, as the fund cut about $52.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 12 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Anthem Inc (NYSE:ANTM) but similarly valued. We will take a look at Intuitive Surgical, Inc. (NASDAQ:ISRG), Fidelity National Information Services Inc. (NYSE:FIS), Lam Research Corporation (NASDAQ:LRCX), S&P Global Inc. (NYSE:SPGI), Coupang, Inc. (NYSE:CPNG), Cigna Corporation (NYSE:CI), and U.S. Bancorp (NYSE:USB). All of these stocks' market caps match ANTM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ISRG,53,2326096,4 FIS,74,8251021,-14 LRCX,54,3164975,-2 SPGI,66,6245296,-9 CPNG,40,21669289,40 CI,53,2497828,-4 USB,43,8335231,-17 Average,54.7,7498534,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 54.7 hedge funds with bullish positions and the average amount invested in these stocks was $7499 million. That figure was $5373 million in ANTM's case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand Coupang, Inc. (NYSE:CPNG) is the least popular one with only 40 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. Our overall hedge fund sentiment score for ANTM is 43.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on ANTM, though not to the same extent, as the stock returned 7.3% since Q1 (through June 11th) and outperformed the market as well.
Get real-time email alerts: Follow Anthem Inc. (NYSE:ANTM)
Disclosure: None. This article was originally published at Insider Monkey.