Hedge funds pile up in Encompass Health Corporation (EHC)

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The Insider Monkey team has completed processing 13F quarterly returns for the June quarter submitted by the hedge funds and other fund managers included in our extensive database. Most hedge fund investors have seen strong gains from strong market performance, which has certainly prompted them to adjust their holdings in equities to maintain the desired risk profile. As a result, the relevance of these public repositories and their content is indisputable, as they can reveal many stocks with high potential. The following article will discuss the smart money sentiment towards Encompass Health Corporation (NYSE:EHC).

Encompass Health Corporation (NYSE:EHC) investors should pay attention to an increase in hedge fund sentiment in recent months. Encompass Health Corporation (NYSE:EHC) appeared in 42 hedge fund portfolios at the end of June. This statistic’s all-time high was previously 36. This means that the bullish number of hedge fund positions in this stock is currently at its all-time high. Our calculations also showed that EHC is not one of the 30 most popular stocks among hedge funds (click for Q2 ranking).

In the eyes of most shareholders, hedge funds are viewed as outdated and underperforming investment vehicles of yesteryear. While there are over 8,000 funds with their doors open today, we are looking at the tycoons at this club, roughly 850 funds. These hedge fund managers control most of the total capital of all hedge funds, and by paying attention to their best stock picks, Insider Monkey has determined a few investment strategies that have historically overtaken Mr. Market. Insider Monkey’s flagship short hedge fund strategy has beaten S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Additionally, our monthly newsletter’s long equity selection portfolio has returned 185.4% since March 2017 (through August 2021) and has beaten the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

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Do hedge funds think EHC is a good stock to buy now?

At the end of the second quarter, 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position on EHC a year ago. With the whirlwind of hedge fund sentiment, there is a select group of notable hedge fund managers who were significantly increasing their holdings (or already building up significant positions).

Is EHC a good stock to buy?

Is EHC a good stock to buy?

The largest stake in Encompass Health Corporation (NYSE: EHC) was held by JANA partners, which said it held $ 158.3 million in shares at the end of June. It was followed by Citadel Investment Group with a position of $ 92.5 million. Other bullish investors for the company include Healthcor Management LP, Polar Capital and Point72 Asset Management. In terms of the portfolio weights assigned to each position, JANA Partners assigned the greatest weight to Encompass Health Corporation (NYSE: EHC), approximately 13.06% of its 13F portfolio. Partners of the Iron Triangle is also relatively very bullish on the stock, setting aside 4.53% of its 13F equity portfolio at EHC.

As a result, some big names have jumped head first into Encompass Health Corporation (NYSE: EHC). Jet Capital Investors, managed by Matthew Mark, initiated the most valuable buy position on Encompass Health Corporation (NYSE: EHC). Jet Capital Investors had invested $ 15.6 million in the company at the end of the quarter. Andrew Rechtschaffen AREX capital management also initiated a $ 4.5 million position during the quarter. Other funds with new equity positions are ExodusPoint Capital by Michael Gelband, Echo Street Capital Management by Greg Poole and Prelude Capital by Gavin Saitowitz and Cisco J. del Valle (formerly Springbok Capital).

Now let’s take a look at the hedge fund activity in other stocks – not necessarily in the same industry as Encompass Health Corporation (NYSE: EHC) but of similar value. These shares are Brunswick Corporation (NYSE:Before Christ), AngloGold Ashanti Limited (NYSE:UA), Reinsurance Group of America Inc (NYSE:RGA), Skechers USA Inc (NYSE:SKX), Tempur Sealy International Inc. (NYSE:TPX), Anaplan, Inc. (NYSE:PLAN) and PVH Corp (NYSE:PVH). The market valuations of this group of shares are closest to the market valuation of EHC.

[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF position BC, 38.1095771, -4 AU, 12.372898, -2 RGA, 28.414971.1 SKX, 35.772836, 6 TPX, 35 1096506, -2 PLAN, 52.2141802, -3 PVH, 28.1759709, -6 Medium, 32.6,1093499, -1.4 [/table]

See the table here if you have formatting problems.

As you can see, these stocks had an average of 32.6 hedge funds with bullish positions and the average amount invested in these stocks was $ 1093 million. That figure was $ 865 million in the case of EHC. Anaplan, Inc. (NYSE:PLAN) is the most popular action in this table. On the other hand, AngloGold Ashanti Limited (NYSE:UA) is the least popular with only 12 bullish hedge fund positions. Encompass Health Corporation (NYSE: EHC) isn’t the most popular stock in this group, but hedge fund interest is still above average. Our overall hedge fund sentiment score for EHC is 77.5. 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 have shown 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 22.9% in 2021 through October 1 and again beat the market by 5.6 percentage points. Unfortunately, EHC was not as popular as these 5 stocks and the hedge funds that bet on EHC were disappointed as the stock has returned -5% since the end of June (through 10/1) and has underperformed on Marlet. If you want to invest in large cap stocks with huge upside potential, you should check out the top 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 Monkey initiate.



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