In this article we will check out the progression of hedge fund sentiment towards eHealth, Inc. (NASDAQ:EHTH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
eHealth, Inc. (NASDAQ:EHTH) has seen an increase in support from the world’s most elite money managers of late. eHealth, Inc. (NASDAQ:EHTH) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 35. Our calculations also showed that EHTH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jeffrey Smith of Starboard Value LP
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Do Hedge Funds Think EHTH Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in EHTH a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Starboard Value LP, managed by Jeffrey Smith, holds the most valuable position in eHealth, Inc. (NASDAQ:EHTH). Starboard Value LP has a $110.9 million position in the stock, comprising 2.2% of its 13F portfolio. The second largest stake is held by Douglas Braunstein and James Woolery of Hudson Executive Capital, with a $87.7 million position; 5.8% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise Palo Alto Investors, Malcolm Levine’s Dendur Capital and Harry Gail’s Harspring Capital Management. In terms of the portfolio weights assigned to each position Headlands Capital allocated the biggest weight to eHealth, Inc. (NASDAQ:EHTH), around 12.71% of its 13F portfolio. Dendur Capital is also relatively very bullish on the stock, earmarking 6.14 percent of its 13F equity portfolio to EHTH.
As industrywide interest jumped, specific money managers were breaking ground themselves. Dendur Capital, managed by Malcolm Levine, initiated the largest position in eHealth, Inc. (NASDAQ:EHTH). Dendur Capital had $36.9 million invested in the company at the end of the quarter. Andrew Kurita’s Kettle Hill Capital Management also initiated a $11.8 million position during the quarter. The other funds with brand new EHTH positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to eHealth, Inc. (NASDAQ:EHTH). We will take a look at NANO-X IMAGING LTD (NASDAQ:NNOX), Generation Bio Co. (NASDAQ:GBIO), Stewart Information Services Corp (NYSE:STC), NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), istar Inc (NYSE:STAR), BP Midstream Partners LP (NYSE:BPMP), and LTC Properties Inc (NYSE:LTC). This group of stocks’ market caps match EHTH’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NNOX,11,28721,8 GBIO,13,201751,4 STC,17,112471,-2 NGM,19,213005,1 STAR,18,180477,-4 BPMP,6,10972,1 LTC,10,8977,3 Average,13.4,108053,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $379 million in EHTH’s case. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is the most popular stock in this table. On the other hand BP Midstream Partners LP (NYSE:BPMP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks eHealth, Inc. (NASDAQ:EHTH) is more popular among hedge funds. Our overall hedge fund sentiment score for EHTH is 76.6. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately EHTH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EHTH were disappointed as the stock returned -23.6% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.