Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in 1Life Healthcare, Inc. (NASDAQ:ONEM)? The smart money sentiment can provide an answer to this question.
Hedge fund interest in 1Life Healthcare, Inc. (NASDAQ:ONEM) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ONEM isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 Stag Industrial Inc (NYSE:STAG), Cousins Properties Incorporated (NYSE:CUZ), and Schrodinger, Inc. (NASDAQ:SDGR) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a gander at the key hedge fund action encompassing 1Life Healthcare, Inc. (NASDAQ:ONEM).
Do Hedge Funds Think ONEM Is A Good Stock To Buy Now?
At the end of March, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ONEM over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Tiger Global Management LLC was the largest shareholder of 1Life Healthcare, Inc. (NASDAQ:ONEM), with a stake worth $297.8 million reported as of the end of March. Trailing Tiger Global Management LLC was Maverick Capital, which amassed a stake valued at $143.1 million. ARK Investment Management, 12 West Capital Management, and Two Sigma Advisors 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 12 West Capital Management allocated the biggest weight to 1Life Healthcare, Inc. (NASDAQ:ONEM), around 1.92% of its 13F portfolio. Maverick Capital is also relatively very bullish on the stock, setting aside 1.32 percent of its 13F equity portfolio to ONEM.
Judging by the fact that 1Life Healthcare, Inc. (NASDAQ:ONEM) has experienced falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their full holdings heading into Q2. At the top of the heap, Michael Rockefeller and KarláKroeker’s Woodline Partners dumped the largest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $18.6 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also sold off its stock, about $17.4 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to 1Life Healthcare, Inc. (NASDAQ:ONEM). We will take a look at Stag Industrial Inc (NYSE:STAG), Cousins Properties Incorporated (NYSE:CUZ), Schrodinger, Inc. (NASDAQ:SDGR), ACV Auctions Inc. (NASDAQ:ACVA), Grupo Aeroportuario del Sureste (NYSE:ASR), National Oilwell Varco, Inc. (NYSE:NOV), and Fox Factory Holding Corp (NASDAQ:FOXF). All of these stocks’ market caps are similar to ONEM’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $751 million in ONEM’s case. National Oilwell Varco, Inc. (NYSE:NOV) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste (NYSE:ASR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks 1Life Healthcare, Inc. (NASDAQ:ONEM) is more popular among hedge funds. Our overall hedge fund sentiment score for ONEM is 85. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately ONEM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ONEM were disappointed as the stock returned -14.3% since the end of the first quarter (through 7/2) 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.