Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of PRA Health Sciences Inc (NASDAQ:PRAH) based on that data and determine whether they were really smart about the stock.
PRA Health Sciences Inc (NASDAQ:PRAH) was in 33 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. PRAH has seen an increase in hedge fund sentiment in recent months. There were 29 hedge funds in our database with PRAH holdings at the end of March. Our calculations also showed that PRAH 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 leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Keeping this in mind let’s take a gander at the key hedge fund action regarding PRA Health Sciences Inc (NASDAQ:PRAH).
What have hedge funds been doing with PRA Health Sciences Inc (NASDAQ:PRAH)?
At the end of the second quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PRAH over the last 20 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in PRA Health Sciences Inc (NASDAQ:PRAH) was held by AQR Capital Management, which reported holding $57.1 million worth of stock at the end of September. It was followed by Redmile Group with a $27.2 million position. Other investors bullish on the company included Fisher Asset Management, Millennium Management, and Sectoral Asset Management. In terms of the portfolio weights assigned to each position Sectoral Asset Management allocated the biggest weight to PRA Health Sciences Inc (NASDAQ:PRAH), around 0.89% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, earmarking 0.5 percent of its 13F equity portfolio to PRAH.
As one would reasonably expect, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in PRA Health Sciences Inc (NASDAQ:PRAH). Millennium Management had $17.8 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also initiated a $2.2 million position during the quarter. The following funds were also among the new PRAH investors: Renaissance Technologies, Greg Eisner’s Engineers Gate Manager, and Lee Ainslie’s Maverick Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as PRA Health Sciences Inc (NASDAQ:PRAH) but similarly valued. We will take a look at Herbalife Nutrition Ltd. (NYSE:HLF), LPL Financial Holdings Inc (NASDAQ:LPLA), BanColombia S.A. (NYSE:CIB), Assurant, Inc. (NYSE:AIZ), Encompass Health Corporation (NYSE:EHC), ADT Inc. (NYSE:ADT), and Adaptive Biotechnologies Corporation (NASDAQ:ADPT). All of these stocks’ market caps are similar to PRAH’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 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $1176 million. That figure was $170 million in PRAH’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 9 bullish hedge fund positions. PRA Health Sciences Inc (NASDAQ:PRAH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRAH is 70.3. 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. 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 33% in 2020 through the end of August and beat the market by 23.2 percentage points. Unfortunately PRAH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PRAH were disappointed as the stock returned 9.9% 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.
Disclosure: None. This article was originally published at Insider Monkey.