In this article, we discuss 10 healthcare stocks to buy according to Tiger Cub Chase Coleman.
After graduating from Williams College in 1997 with a Bachelor’s in Economics, Chase Coleman worked for Julian Robertson’s Tiger Management for almost 4 years as an investment analyst, from July 1997 to March 2001. When Tiger Management was shut down in 2000, Coleman continued working for Robertson, managing his personal capital. Soon after, Chase Coleman, a true Tiger Cub, founded Tiger Global Management in 2001, with $25 million start-up capital from Julian Robertson.
Tiger Global Management has a portfolio valued at over $52 billion, as per the 13F filings from the third quarter of 2021. Coleman follows a technology-themed investment strategy, with 50% of his portfolio concentrated with investments in the technology sector. He also has interests in the consumer discretionary, healthcare, finance, and communications sectors.
Chase Coleman follows two main investing strategies at Tiger Global Management, dividing the total portfolio capital between the private and public equity business managed by the hedge fund. The public equity business at Tiger Global conducts extensive fundamental research on selected industries and geographies, focused on long-term investments in the companies that are positioned to deliver the highest returns. The fund’s private equity business was launched in 2003. The private equity segment has ten-year investment horizons and targets growth-oriented private companies, with a particular interest in businesses from the U.S., China, and India.
Some of the most notable stocks from Chase Coleman’s third quarter portfolio include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), and Alibaba Group Holding Limited (NYSE:BABA).
Chase Coleman of Tiger Global
Our Methodology
To select the 10 best healthcare stocks to buy according to Tiger Cub Chase Coleman, we used the Q3 portfolio of his hedge fund, Tiger Global Management.
For the selected companies, we have mentioned the Q3 earnings, analyst ratings, and the hedge fund sentiment around each stock, ranking the list according to Tiger Global Management’s stake value in each holding.
Healthcare Stocks to Buy According to Tiger Cub Chase Coleman
10. Oak Street Health, Inc. (NYSE:OSH)
Tiger Global Management’s Stake Value: $1,063,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.00%
Number of Hedge Fund Holders: 19
Oak Street Health, Inc. (NYSE:OSH) is a primary healthcare company offering preventative care to senior citizens on Medicare. Oak Street Health, Inc. works towards lowering medical costs and improving the patient experience. Tiger Global Management, as of the third quarter of 2021, holds 25,000 Oak Street Health, Inc. shares, worth $1.06 million.
According to Insider Monkey’s Q3 data, 19 hedge funds reported owning stakes in Oak Street Health, Inc., worth $395.2 million. This is compared to 33 funds being bullish on the stock in the preceding quarter, with total stakes amounting to $561.3 million. Route One Investment Company, the largest Oak Street Health, Inc. stakeholder, increased its position in the company by 76% in Q3, holding 2.22 million shares worth $94.5 million.
In the third quarter report, published on November 8, Oak Street Health, Inc. posted a loss per share of $0.48, missing estimates by $0.12. The $388.70 million revenue was up 78.39% year-over-year, exceeding estimates by $31.17 million.
On December 17, Morgan Stanley analyst Ricky Goldwasser downgraded Oak Street Health, Inc. to Equal Weight from Overweight with a price target of $33, down from $44. Oak Street Health, Inc.’s fundamental growth story looks intact, but Goldwasser’s new valuation analysis shows that Oak Street Health, Inc.’s long-term margin targets are priced in, especially relative to competitors like 1Life Healthcare, Inc. (NASDAQ:ONEM).
Oak Street Health, Inc. is one of the best stocks from the Q3 portfolio of Tiger Cub Chase Coleman, in addition to Microsoft Corporation, Amazon.com, Inc., Meta Platforms, Inc., Netflix, Inc., and Alibaba Group Holding Limited.
9. Health Catalyst, Inc. (NASDAQ:HCAT)
Tiger Global Management’s Stake Value: $2,501,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.00%
Number of Hedge Fund Holders: 26
Health Catalyst, Inc. (NASDAQ:HCAT), a recognized provider of data and analytics technology and services to healthcare organizations, is one of the best healthcare stocks to buy according to Tiger Cub Chase Coleman. Coleman, via Tiger Global Management, owns 50,000 shares of Health Catalyst, Inc. as of Q3 2021, worth $2.5 million.
Publishing its third quarter results on November 9, Health Catalyst, Inc. posted a loss per share of $0.18, beating estimates by $0.04. The quarterly revenue jumped 30.82% to $61.74 million, outperforming estimates by $913,640.
Jefferies analyst Glen Santangelo on December 1 initiated coverage of Health Catalyst, Inc. with a Hold rating and a $48 price target. While the analyst believes Health Catalyst, Inc.’s data and analytics platform offers a compelling value proposition, he initiated a Hold rating due to increased competition, limited visibility, and lack of profitability.
The leading Health Catalyst, Inc. stakeholder as of September 2021 is Rock Springs Capital Management, with 850,000 shares worth $42.5 million. Overall, 26 hedge funds tracked by Insider Monkey were long Health Catalyst, Inc. in Q3 2021, up from 22 funds in the prior quarter.
8. Outset Medical, Inc. (NASDAQ:OM)
Tiger Global Management’s Stake Value: $2,719,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.00%
Number of Hedge Fund Holders: 18
Chase Coleman holds 55,000 Outset Medical, Inc. (NASDAQ:OM) shares, worth $2.71 million, as of the third quarter of 2021. Outset Medical, Inc. is a pioneering medical technology and software company specializing in reimagining dialysis for patients and medical professionals.
On November 3, Outset Medical, Inc. reported its Q3 results, posting a loss per share of $0.59, beating estimates by $0.10. The revenue increased 91.32% from the preceding year quarter, reaching $26.32 million, exceeding estimates by $1.04 million.
According to the hedge funds tracked by Insider Monkey in the third quarter, billionaire Daniel Sundheim’s D1 Capital Partners is the largest Outset Medical, Inc. stakeholder, with 4.57 million shares worth $226.2 million. Overall, 18 funds were long Outset Medical, Inc. in Q3 2021, with total stakes amounting to $602.7 million.
7. American Well Corporation (NYSE:AMWL)
Tiger Global Management’s Stake Value: $3,644,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.00%
Number of Hedge Fund Holders: 24
American Well Corporation (NYSE:AMWL), a Boston-based telehealth company connecting doctors with patients for virtual checkups and consultations, is one of the top healthcare stocks to buy according to Tiger Global Management’s Chase Coleman. As of Q3 2021, Coleman owns 400,000 American Well Corporation shares, worth $3.64 million.
A total of 24 hedge funds monitored by Insider Monkey at the end of September 2021 were bullish on American Well Corporation, up from 20 funds in the previous quarter, with total Q3 stakes amounting to approximately $79 million. The leading American Well Corporation stakeholder is Robert M. P. Luciano’s VGI Partners, with 2.23 million shares worth $20.36 million.
In American Well Corporation’s third quarter earnings report, published on November 10, the company posted a loss per share of $0.17, topping estimates by $0.04. The $62.22 million revenue was down 0.52% on a year-over-year basis, missing estimates by $3.26 million.
On December 1, Jefferies analyst Glen Santangelo initiated coverage of American Well Corporation with a Hold rating and a $6 price target, citing slower growth in 2021. The analyst also observed that American Well Corporation “missed on many operating metrics discussed at the beginning of the year”.
Here is what Baron Funds has to say about American Well Corporation in its Q2 2021 investor letter:
“We exited modest positions in American Well Corporation during the quarter. We think that this sale exemplifies the merits of maintaining small initial position sizes. We were initially excited by the long-term opportunities represented by the business and the valuations at which we were able to deploy capital. However, our ongoing and iterative due diligence efforts surfaced concerns regarding the sustainability of competitive advantages over our investment horizon. Additionally, we observed changes to incentive structures that potentially foreshadowed a future misalignment with shareholders. We were easily able to exit these modest positions and reallocate that capital to investments in which we have greater conviction that we believe offer more attractive risk-adjusted returns.”
6. Definitive Healthcare Corp. (NASDAQ:DH)
Tiger Global Management’s Stake Value: $25,698,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 23
Definitive Healthcare Corp. (NASDAQ:DH) is a company that transforms data, analytics, and expertise into healthcare commercial intelligence to accelerate the growth of healthcare corporations. Tiger Global Management holds a $25.69 million position in Definitive Healthcare Corp. as of September 2021, which represents 0.04% of the firm’s total Q3 investments.
Definitive Healthcare Corp. posted its Q3 earnings on November 8, announcing an EPS of $0.01, missing estimates by $0.01. Revenue over the period totaled $43.08 million, beating estimates by $1.90 million.
On December 17, Morgan Stanley analyst Craig Hettenbach upgraded Definitive Healthcare Corp. to Overweight from Equal Weight with a price target of $40, down from $46. With the stock 50% off its high and below the IPO price, he says investors get “a second shot to buy into secular growth and high profitability.” Catalysts for Definitive Healthcare Corp. include potential new enterprise customer announcements and tuck-in M&A optionality, according to the analyst.
Of the 23 hedge funds that were bullish on Definitive Healthcare Corp. as per the third quarter database of elite funds maintained by Insider Monkey, Greg Poole’s Echo Street Capital Management is the leading stakeholder of the company, holding over 1 million shares worth $45.1 million.
Definitive Healthcare Corp. is a notable stock from the Q3 portfolio of Chase Coleman, in addition to Microsoft Corporation, Amazon.com, Inc., Meta Platforms, Inc., Netflix, Inc., and Alibaba Group Holding Limited.
5. Ginkgo Bioworks Holdings, Inc. (NYSE:DNA)
Tiger Global Management’s Stake Value: $28,106,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.05%
Number of Hedge Fund Holders: 32
Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), a biotech company engaged in genetic engineering to produce bacteria with industrial applications, is one of the best healthcare stocks to buy according to Tiger Cub Chase Coleman. Coleman, via Tiger Global Management, holds a $28.1 million stake in Ginkgo Bioworks Holdings, Inc., which accounts for 0.05% of the firm’s total Q3 securities.
Ginkgo Bioworks Holdings, Inc. published on November 15 its Q3 results. The company posted a loss per share of $0.08, missing estimates by $0.05. Revenue for the quarter equaled $77.61 million, exceeding estimates by $31.61 million.
Jefferies analyst Laurence Alexander on November 29 initiated coverage of Ginkgo Bioworks Holdings, Inc. with a Buy rating and a $16 price target. With $1.7 billion cash on hand, the analyst projects Ginkgo Bioworks Holdings, Inc. to be able to leverage secular trends in favor of synthetic biology to grow from $221 million in sales in 2021 to $1.1 billion in 2025 and $4.5 billion in 2030. He expects Ginkgo Bioworks Holdings, Inc. to monetize the value of its programs through a mix of royalties, license payments, and equity share.
In the third quarter database of 867 elite hedge funds maintained by Insider Monkey, 32 funds reported owning stakes in Ginkgo Bioworks Holdings, Inc., worth $5.69 billion.
4. GoodRx Holdings, Inc. (NASDAQ:GDRX)
Tiger Global Management’s Stake Value: $96,192,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 26
Another top healthcare stock pick of Chase Coleman from Q3 2021 is GoodRx Holdings, Inc. (NASDAQ:GDRX), an American healthcare company that manages a telemedicine platform, in addition to a free website and mobile application that checks prescription drug prices across more than 75,000 pharmacies in the United States.
Chase Coleman owns 2.34 million GoodRx Holdings, Inc. shares, worth $96.1 million, representing 0.18% of the total Q3 investments at Tiger Global Management.
GoodRx Holdings, Inc. reported third quarter earnings on November 10. The company posted earnings per share of $0.09, in line with analysts’ consensus estimates. The revenue totaled $195.10 million, up 38.91% year-over-year, exceeding estimates by $551,120.
Jefferies analyst Glen Santangelo initiated coverage of GoodRx Holdings, Inc. on December 1 with a Buy rating and a $47 price target. According to the analyst, GoodRx Holdings, Inc. is a “Rule of 70-plus company, which is rare for a company of its size,” and the stock’s valuation is reasonable at current levels.
Silver Lake Partners is the largest GoodRx Holdings, Inc. stakeholder from the third quarter, with 3.53 million shares worth $144.8 million. Overall, 26 hedge funds monitored by Insider Monkey were bullish on GoodRx Holdings, Inc., down from 28 funds in the preceding quarter.
Here is what Baron Funds has to say about GoodRx Holdings, Inc. in its Q3 2021 investor letter:
“We initiated a position in GoodRx Holdings, Inc., a leading consumer focused digital healthcare platform. The company’s core offering is a free App that provides consumers with access to discounts on prescription medications. This increases medication adherence since GoodRx’s discounted prices enable consumers to afford to fill their prescriptions, resulting in better health care outcomes and lower costs to the health care system. GoodRx generates revenue each time the consumer uses the GoodRx discount card for a new or refilled prescription. As GoodRx attracts more consumers to its platform, the company increases its scale, which enables it to negotiate lower prices, which attracts more consumers. GoodRx has a growing subscription business where consumers pay monthly subscription fees to access even lower drug prices. The subscription business increases GoodRx’s revenue visibility and customer lifetime value. GoodRx has a strong brand with exceptionally high Net Promoter Scores among consumers and health care providers. With 20 million monthly visitors, GoodRx has a valuable platform that it is monetizing by adding new products and services. Recent examples include its telehealth offering, pharmaceutical manufacturer solutions business, and proprietary health care content, which should help solidify GoodRx’s positioning as the go-to health care platform for consumers. GoodRx is profitable and growing rapidly with strong margins and cash flows.”
3. Bright Health Group, Inc. (NYSE:BHG)
Tiger Global Management’s Stake Value: $96,678,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.18%
Number of Hedge Fund Holders: 14
Bright Health Group, Inc. (NYSE:BHG), a Minnesota-based health insurance company, makes up 0.18% of Tiger Global Management’s Q3 portfolio, with the firm holding a $96.6 million stake in Bright Health Group, Inc..
In the third quarter of 2021, 14 hedge funds tracked by Insider Monkey were bullish on Bright Health Group, Inc., with total stakes valued at $529.3 million. This is compared to 23 funds in the prior quarter, holding stakes worth $1.28 billion in Bright Health Group, Inc..
On November 11, Bright Health Group, Inc. announced its Q3 results. The company posted a loss per share of $0.46, missing estimates by $0.32. The $1.08 billion revenue exceeded estimates by $9.25 million.
Morgan Stanley analyst Ricky Goldwasser on December 17 downgraded Bright Health Group, Inc. to Underweight from Equal Weight with a price target of $4, down from $5. The analyst sees the most difficult road ahead for Bright Health Group, Inc. in the “healthcare disruptor” IPO class, citing the company’s elevated operating losses and unsteady performance.
Stepstone Group is the biggest Bright Health Group, Inc. stakeholder from the third quarter, holding 44.65 million shares worth $364.35 million.
Here is what Nomadic Value Partners has to say about Bright Health Group, Inc. in its Q3 2021 investor letter:
“In the first week of August, we made a farm team investment in Bright Health Group (BHG), a health insurer with a similar payer/provider integration strategy as United Health. On September 30th we upsized our position to a 5% weighting. Our averaged cost basis of $8.16 per share creates the company at a valuation slightly over 1x 2021’s expected sales. This valuation may be appropriate for a low growth, old world health insurer, but it is too low in my view after adjusting for the company’s position in the market, various lines of business, and its expected sales growth over the next few years.
To understand why BHG trades at a low valuation today, let’s look at the history and current state of the core market it competes in…” (Click here to see the full text)
2. Oscar Health, Inc. (NYSE:OSCR)
Tiger Global Management’s Stake Value: $130,678,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.25%
Number of Hedge Fund Holders: 17
Headquartered in New York City, Oscar Health, Inc. (NYSE:OSCR) is a healthcare insurance company that uses technological interfaces focused on healthcare to provide a transparent claims pricing system to patients. Oscar Health, Inc. stock represents 0.25% of Tiger Global Management’s 13F portfolio, with the hedge fund owning 7.51 million shares of the company, worth $130.67 million in the third quarter. Coleman’s fund increased its stake in Oscar Health, Inc. by 22% in Q3.
As of September 2021, Joshua Kushner’s Thrive Capital is the largest Oscar Health, Inc. stakeholder, with 37.6 million shares worth $654.1 million. Overall, 17 hedge funds tracked by Insider Monkey were long Oscar Health, Inc., up from 16 funds in the prior quarter.
On November 10, Oscar Health, Inc. posted its Q3 results, announcing a loss per share of $1.02, missing estimates by $0.37. Revenue over the period totaled $668.38 million, outperforming estimates by $27.38 million.
Morgan Stanley analyst Ricky Goldwasser on November 12 lowered the price target on Oscar Health, Inc. to $22 from $26 and kept an Overweight rating on the shares.
1. 1Life Healthcare, Inc. (NASDAQ:ONEM)
Tiger Global Management’s Stake Value: $217,341,000
Percentage of Tiger Global Management’s 13F Portfolio: 0.41%
Number of Hedge Fund Holders: 34
1Life Healthcare, Inc., a San Francisco-based company offering in-person and online primary health care clinics, ranks first on our list of the best healthcare stocks to buy according to Tiger Cub Chase Coleman. Tiger Global Management increased its stake in 1Life Healthcare, Inc. by 41% in Q3, holding a $217.34 million position in the company, which represents 0.41% of the fund’s total investments.
In the third quarter earnings results published on November 3 by 1Life Healthcare, Inc., the company reported a loss per share of $0.34, missing estimates by $0.06. The revenue jumped 48.85% to $151.33 million, outperforming estimates by $5.61 million.
JPMorgan analyst Lisa Gill on December 21 lowered the price target on 1Life Healthcare, Inc. to $28 from $41 and kept an Overweight rating on the shares.
A total of 34 hedge funds in the third quarter database of Insider Monkey were long 1Life Healthcare, Inc., with total stakes amounting to $640.4 million. One of the biggest 1Life Healthcare, Inc. stakeholders from Q3 is Lee Ainslie’s Maverick Capital, with 3.66 million shares worth $74.1 million.
Here is what Nomadic Value Partners has to say about 1Life Healthcare, Inc. in its Q2 2021 investor letter:
“On June 7th One Medical (ONEM) announced an acquisition of Iora Health, a Medicare Advantage primary care business (MA PCP), for $2.1 billion of ONEM stock. The price implies a forward EV/sales valuation of 7x, a meaningful discount to comparables, Oak Street Health (OSH, portfolio holding) and Agilon Health (AGL), who had forward EV/sales multiples at time of announcement of 9x and 8.7x, respectively. However, after analyzing the provided information in combination with some additional industry scuttlebutt, I decided to sell our small position in the stock on June 18th. If you regularly read these quarterly letters, you are probably wondering why I would pass on this deal. In short, there are three reasons:First, Iora Health is not as good of a business as the category leader, Oak Street Health (OSH, current portfolio holding), which causes me to wonder if ONEM is buying a turnaround5. Second, the deal comes with significant integration risks, both tech and cultural, and the synergies presented by management are suspect6. Third, and probably the most important, is lost time as ONEM figures out these two issues over the next 2-3 years. Category leaders are focused on patient acquisition since they have already proven attractive unit economics at some initial scale. ONEM turning inward to plug holes instead of going all-in on patient acquisition could significantly stunt the base on which revenues can compound over the next few years.”
You can also take a look at 10 Artificial Intelligence Stocks in Cathie Wood’s Portfolio and Top 10 Stocks to Buy According to Legendary Value Investor Joel Greenblatt.
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This article is originally published at Insider Monkey.
