The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Phreesia, Inc. (NYSE:PHR) and determine whether the smart money was really smart about this stock.
Phreesia, Inc. (NYSE:PHR) has seen an increase in activity from the world’s largest hedge funds lately. Phreesia, Inc. (NYSE:PHR) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistics is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PHR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (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, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox.Keeping this in mind we’re going to view the recent hedge fund action surrounding Phreesia, Inc. (NYSE:PHR).
How have hedgies been trading Phreesia, Inc. (NYSE:PHR)?
Heading into the third quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 150% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in PHR over the last 20 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the number one position in Phreesia, Inc. (NYSE:PHR), worth close to $19.1 million, corresponding to 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Kris Jenner, Gordon Bussard, Graham McPhail of Rock Springs Capital Management, with a $18.4 million position; 0.5% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions contain Justin John Ferayorni’s Tamarack Capital Management, Richard Driehaus’s Driehaus Capital and Peter S. Park’s Park West Asset Management. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Phreesia, Inc. (NYSE:PHR), around 3.15% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, designating 0.71 percent of its 13F equity portfolio to PHR.
Now, key hedge funds were leading the bulls’ herd. Select Equity Group, managed by Robert Joseph Caruso, created the largest position in Phreesia, Inc. (NYSE:PHR). Select Equity Group had $19.1 million invested in the company at the end of the quarter. Peter S. Park’s Park West Asset Management also initiated a $8.5 million position during the quarter. The other funds with brand new PHR positions are Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Greg Poole’s Echo Street Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Phreesia, Inc. (NYSE:PHR) but similarly valued. These stocks are Harsco Corporation (NYSE:HSC), Eagle Bancorp, Inc. (NASDAQ:EGBN), Phibro Animal Health Corp (NASDAQ:PAHC), Simulations Plus, Inc. (NASDAQ:SLP), Xenia Hotels & Resorts Inc (NYSE:XHR), Constellium SE (NYSE:CSTM), and Hailiang Education Group Inc. (NASDAQ:HLG). This group of stocks’ market values are closest to PHR’s market value.
|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 14 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $106 million in PHR’s case. Constellium SE (NYSE:CSTM) is the most popular stock in this table. On the other hand Hailiang Education Group Inc. (NASDAQ:HLG) is the least popular one with only 2 bullish hedge fund positions. Phreesia, Inc. (NYSE:PHR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PHR is 40. 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 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 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on PHR as the stock returned 13.6% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.