Hedge Funds Have Never Been This Bullish On eHealth, Inc. (EHTH)

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards eHealth, Inc. (NASDAQ:EHTH).

eHealth, Inc. (NASDAQ:EHTH) investors should be aware of 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 (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a lot of tools stock market investors employ to grade their holdings. A duo of the most under-the-radar tools are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can outclass the S&P 500 by a very impressive margin (see the details here).

Samuel Isaly Orbimed Advisors

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the recent hedge fund action regarding eHealth, Inc. (NASDAQ:EHTH).

How have hedgies been trading eHealth, Inc. (NASDAQ:EHTH)?

Heading into the third quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in EHTH a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

No of Hedge Funds with EHTH Positions

When looking at the institutional investors followed by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the number one position in eHealth, Inc. (NASDAQ:EHTH). OrbiMed Advisors has a $78.3 million position in the stock, comprising 1.2% of its 13F portfolio. On OrbiMed Advisors’s heels is Redmile Group, managed by Jeremy Green, which holds a $76.5 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish consist of Ken Griffin’s Citadel Investment Group, Paul Reeder and Edward Shapiro’s PAR Capital Management and Joseph Edelman’s Perceptive Advisors.

As industrywide interest jumped, key hedge funds have jumped into eHealth, Inc. (NASDAQ:EHTH) headfirst. BeaconLight Capital, managed by Ed Bosek, assembled the most valuable position in eHealth, Inc. (NASDAQ:EHTH). BeaconLight Capital had $8.1 million invested in the company at the end of the quarter. Genevieve Kahr’s Ailanthus Capital Management also initiated a $4.3 million position during the quarter. The following funds were also among the new EHTH investors: Josh Goldberg’s G2 Investment Partners Management, Joel Greenblatt’s Gotham Asset Management, and Mike Vranos’s Ellington.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as eHealth, Inc. (NASDAQ:EHTH) but similarly valued. These stocks are Lattice Semiconductor Corporation (NASDAQ:LSCC), NMI Holdings Inc (NASDAQ:NMIH), Tronox Holdings plc (NYSE:TROX), and Focus Financial Partners Inc. (NASDAQ:FOCS). All of these stocks’ market caps resemble EHTH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LSCC 20 240193 -5
NMIH 19 230398 4
TROX 20 174636 -4
FOCS 9 38089 4
Average 17 170829 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $454 million in EHTH’s case. Lattice Semiconductor Corporation (NASDAQ:LSCC) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks eHealth, Inc. (NASDAQ:EHTH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EHTH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EHTH were disappointed as the stock returned -22.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.

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