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Do Hedge Funds Love NantHealth, Inc. (NH)?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards NantHealth, Inc. (NASDAQ:NH).

NantHealth, Inc. (NASDAQ:NH) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of March. At the end of this article we will also compare NH to other stocks including Allegro Merger Corp. (NASDAQ:ALGR), Green Plains Inc. (NASDAQ:GPRE), and PDL Community Bancorp (NASDAQ:PDLB) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the new hedge fund action regarding NantHealth, Inc. (NASDAQ:NH).

Hedge fund activity in NantHealth, Inc. (NASDAQ:NH)

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in NH over the last 18 quarters. 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, Renaissance Technologies has the biggest position in NantHealth, Inc. (NASDAQ:NH), worth close to $1 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include Ken Griffin’s Citadel Investment Group, Michael Gelband’s ExodusPoint Capital and . In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to NantHealth, Inc. (NASDAQ:NH), around 0.0011% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.001 percent of its 13F equity portfolio to NH.

Due to the fact that NantHealth, Inc. (NASDAQ:NH) has experienced bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedge funds who sold off their full holdings last quarter. At the top of the heap, Leonard A. Potter’s Wildcat Capital Management cut the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising about $0.1 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dumped about $0 million worth. These moves 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 – not necessarily in the same industry as NantHealth, Inc. (NASDAQ:NH) but similarly valued. These stocks are Allegro Merger Corp. (NASDAQ:ALGR), Green Plains Inc. (NASDAQ:GPRE), PDL Community Bancorp (NASDAQ:PDLB), and Entravision Communications Corporation (NYSE:EVC). This group of stocks’ market caps are closest to NH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALGR 8 18706 -3
GPRE 13 37523 -5
PDLB 2 2431 0
EVC 10 18379 -3
Average 8.25 19260 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $1 million in NH’s case. Green Plains Inc. (NASDAQ:GPRE) is the most popular stock in this table. On the other hand PDL Community Bancorp (NASDAQ:PDLB) is the least popular one with only 2 bullish hedge fund positions. NantHealth, Inc. (NASDAQ:NH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on NH as the stock returned 66% during the second quarter and outperformed the market by an even larger margin.

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