Here is What Hedge Funds Think About McKesson Corporation (MCK)

·5 min read

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on McKesson Corporation (NYSE:MCK).

Hedge fund interest in McKesson Corporation (NYSE:MCK) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that MCK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Public Service Enterprise Group Incorporated (NYSE:PEG), Suncor Energy Inc. (NYSE:SU), and Arthur J. Gallagher & Co. (NYSE:AJG) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let's take a look at the new hedge fund action surrounding McKesson Corporation (NYSE:MCK).

Millennium Management, Catapult Capital Management
Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

Do Hedge Funds Think MCK Is A Good Stock To Buy Now?

At the end of September, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards MCK over the last 25 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Among these funds, Pzena Investment Management held the most valuable stake in McKesson Corporation (NYSE:MCK), which was worth $594 million at the end of the third quarter. On the second spot was Glenview Capital which amassed $345.1 million worth of shares. Millennium Management, Arrowstreet Capital, and Citadel Investment Group 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 Glenview Capital allocated the biggest weight to McKesson Corporation (NYSE:MCK), around 6.32% of its 13F portfolio. Healthcor Management LP is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to MCK.

Due to the fact that McKesson Corporation (NYSE:MCK) has experienced falling interest from hedge fund managers, it's safe to say that there lies a certain "tier" of hedgies that decided to sell off their entire stakes in the third quarter. Interestingly, Michael Burry's Scion Asset Management dumped the biggest position of all the hedgies followed by Insider Monkey, comprising about $130.5 million in stock. Renaissance Technologies, also dropped its stock, about $108.9 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks similar to McKesson Corporation (NYSE:MCK). We will take a look at Public Service Enterprise Group Incorporated (NYSE:PEG), Suncor Energy Inc. (NYSE:SU), Arthur J. Gallagher & Co. (NYSE:AJG), American Water Works Company, Inc. (NYSE:AWK), Nokia Corporation (NYSE:NOK), Phillips 66 (NYSE:PSX), and Liberty Broadband Corp (NASDAQ:LBRDA). All of these stocks' market caps are similar to MCK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PEG,26,518847,0 SU,32,1084858,0 AJG,32,1388489,-8 AWK,28,1127944,-2 NOK,22,388301,-4 PSX,34,409385,8 LBRDA,24,885745,-4 Average,28.3,829081,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $829 million. That figure was $2277 million in MCK's case. Phillips 66 (NYSE:PSX) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks McKesson Corporation (NYSE:MCK) is more popular among hedge funds. Our overall hedge fund sentiment score for MCK is 77.5. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on MCK as the stock returned 8.9% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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