Hedge Funds Can’t Buy Enough Of eHealth, Inc. (EHTH)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about eHealth, Inc. (NASDAQ:EHTH)?

eHealth, Inc. (NASDAQ:EHTH) has seen an increase in enthusiasm from smart money in recent months. Our calculations also showed that EHTH isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

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.

Samuel Isaly Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

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 trades like this one. 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. With all of this in mind let’s take a look at the latest hedge fund action regarding eHealth, Inc. (NASDAQ:EHTH).

What does smart money think about eHealth, Inc. (NASDAQ:EHTH)?

At the end of the first quarter, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EHTH over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Is EHTH A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the number one position in eHealth, Inc. (NASDAQ:EHTH). Citadel Investment Group has a $100.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Samuel Isaly of OrbiMed Advisors, with a $89.9 million position; 1.5% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish encompass Daniel Patrick Gibson’s Sylebra Capital Management, Stephen Perkins’s Toronado Partners and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Toronado Partners allocated the biggest weight to eHealth, Inc. (NASDAQ:EHTH), around 12.7% of its 13F portfolio. Pinz Capital is also relatively very bullish on the stock, dishing out 6.93 percent of its 13F equity portfolio to EHTH.

Now, specific money managers have jumped into eHealth, Inc. (NASDAQ:EHTH) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in eHealth, Inc. (NASDAQ:EHTH). Arrowstreet Capital had $10.1 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also initiated a $7.9 million position during the quarter. The following funds were also among the new EHTH investors: Ken Grossman and Glen Schneider’s SG Capital Management, Noam Gottesman’s GLG Partners, and Justin John Ferayorni’s Tamarack Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as eHealth, Inc. (NASDAQ:EHTH) but similarly valued. These stocks are Tapestry, Inc. (NYSE:TPR), AGCO Corporation (NYSE:AGCO), TerraForm Power Inc (NASDAQ:TERP), and Graphic Packaging Holding Company (NYSE:GPK). This group of stocks’ market caps are similar to EHTH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TPR 37 351229 -3
AGCO 19 125602 -9
TERP 17 217631 2
GPK 33 340462 -6
Average 26.5 258731 -4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $259 million. That figure was $411 million in EHTH’s case. Tapestry, Inc. (NYSE:TPR) is the most popular stock in this table. On the other hand TerraForm Power Inc (NASDAQ:TERP) is the least popular one with only 17 bullish hedge fund positions. eHealth, Inc. (NASDAQ:EHTH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 but beat the market by 13.2 percentage points. Unfortunately EHTH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EHTH were disappointed as the stock returned -7.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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