Where are the hedge funds at Clover Health Investments, Corp.? (CLOV)?
Before we spend countless hours researching a company, we like to first analyze what insiders, hedge funds, and billionaire investors think about the stock. This is a necessary first step in our investment process, as our research has shown that the consensus returns from elite investors have been exceptional. In the following paragraphs, we find out what billionaire investors and hedge funds have to say about Clover Health Investments, Corp. (NASDAQ: CLOV).
Interest of hedge funds in Clover Health Investments, Corp. (NASDAQ: CLOV) shares was stable at the end of the last quarter. This is usually a negative indicator. Our calculations also showed that CLOV is not in the top 30 most popular stocks among hedge funds (click for Q2 rank). The level and evolution of the popularity of hedge funds are not the only variables to analyze in order to decipher the prospects for hedge funds. A stock may experience an increase in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we’ll be looking at companies like HUTCHMED (China) Limited (NASDAQ: HCM), The Descartes Systems Group Inc (NASDAQ: DSGX), and Healthcare Trust Of America Inc (NYSE: HTA) to collect more data points.
The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indices. Hedge funds have over $ 3.5 trillion in assets under management, so you can’t expect all of their portfolios to beat the market with significant margins. Our research identified in advance a select group of hedge funds that have outperformed S&P 500 ETFs by more than 79 percentage points since March 2017 (see details here). So you can still find a lot of gems by following the movements of hedge funds today.
Bart Baum of Ionic Capital Management
At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the top 10 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. Now let’s take a look at the recent hedge fund action regarding Clover Health Investments, Corp. (NASDAQ: CLOV).
Do hedge funds think CLOV is a good stock to buy now?
Heading into the third quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were long on this stock, a change of 0% from the previous quarter. On the other hand, there was a total of 0 hedge funds with a bullish position on CLOV a year ago. So let’s see which hedge funds were among the top stock holders and which hedge funds were making big moves.
The largest stake in Clover Health Investments, Corp. (NASDAQ: CLOV) was owned by Greenoaks Capital, which said it held shares worth $ 1,283.1 million at the end of June. It was followed by Citadel Investment Group with a position of $ 31.2 million. Other bullish investors for the company included Ionic Capital Management, Perceptive Advisors and Millennium Management. In terms of the portfolio weights assigned to each position, Greenoaks Capital assigned the largest weight to Clover Health Investments, Corp. (NASDAQ: CLOV), around 9.66% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, distributing 2.24% of its portfolio of 13F shares to CLOV.
Judging by the fact that Clover Health Investments, Corp. (NASDAQ: CLOV) has seen a decline in interest from the global hedge fund industry, logic is that there is a cult of fund managers who decided to sell their entire holdings in the quarter latest. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group cut the largest investment out of the “top crust” of funds monitored by Insider Monkey, worth around $ 37.8 million in stocks. Parvinder Thiara’s fund Athanor Capital also sold its shares, worth around $ 2.9 million. These trades are interesting because the overall interest of hedge funds has remained the same (this is a bearish signal in our experience).
Let’s take a look at the activity of hedge funds in other stocks – not necessarily in the same industry as Clover Health Investments, Corp. (NASDAQ: CLOV) but of similar value. We’ll be looking at HUTCHMED (China) Limited (NASDAQ: HCM), The Descartes Systems Group Inc (NASDAQ: DSGX), Healthcare Trust Of America Inc (NYSE: HTA), South State Corporation (NASDAQ: SSB), Nordstrom, Inc. (NYSE : JWN), Shell Midstream Partners LP (NYSE: SHLX) and Unum Group (NYSE: UNM). The stock market valuations of this group of shares correspond to the stock market valuation of CLOV.
[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF position HCM, 10.59992.2 DSGX, 15.307454.4 HTA, 23.226444.6 SSB, 18.298543, -6 JWN, 31.445649, -3 SHLX, 4.32323.0 UNM, 23.324091, -10 Medium, 17.7,242071, -1 [/table]
Check the table here if you have formatting issues.
As you can see, these stocks had an average of 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $ 242 million. That figure was $ 1,416 million in the case of CLOV. Nordstrom, Inc. (NYSE: JWN) is the most popular stock in this table. On the other hand, Shell Midstream Partners LP (NYSE: SHLX) is the least popular with only 4 bullish hedge fund positions. Clover Health Investments, Corp. (NASDAQ: CLOV) isn’t the most popular stock in this group, but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLOV is 70.2. Stocks with a higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal, but we prefer to spend our time researching the stocks on which hedge funds are accumulating. Our calculations showed that the 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 24% in 2021 through October 22 and again beat the market by 1.6 percentage points. Unfortunately, CLOV was not as popular as these 5 stocks and the hedge funds that bet on CLOV were disappointed as the stock has returned -43.7% since the end of June (through 10/22) and has under- performed the market. If you want to invest in large cap stocks with huge upside potential, you should check out the 5 most popular stocks among hedge funds, as many of these stocks have already outperformed the market since 2019.
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Disclosure: none. This article originally appeared on Insider Monkey.