We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) based on that data.
Is Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) worth your attention right now? The smart money is turning bullish. The number of long hedge fund bets inched up by 2 lately. Our calculations also showed that TRHC isn’t among the 30 most popular stocks among hedge funds. TRHC was in 12 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 10 hedge funds in our database with TRHC positions at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s view the key hedge fund action encompassing Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC).
What have hedge funds been doing with Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC)?
At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in TRHC over the last 14 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) was held by Driehaus Capital, which reported holding $4.5 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $4.3 million position. Other investors bullish on the company included Royce & Associates, Polar Capital, and AQR Capital Management.
As one would reasonably expect, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, created the largest position in Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). Citadel Investment Group had $4.3 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Phil Frohlich’s Prescott Group Capital Management, and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). We will take a look at Matthews International Corp (NASDAQ:MATW), Raven Industries, Inc. (NASDAQ:RAVN), Tootsie Roll Industries, Inc. (NYSE:TR), and Phibro Animal Health Corp (NASDAQ:PAHC). This group of stocks’ market valuations are similar to TRHC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MATW | 12 | 53497 | 0 |
| RAVN | 15 | 75979 | 0 |
| TR | 11 | 80950 | -1 |
| PAHC | 20 | 55784 | -1 |
| Average | 14.5 | 66553 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $24 million in TRHC’s case. Phibro Animal Health Corp (NASDAQ:PAHC) is the most popular stock in this table. On the other hand Tootsie Roll Industries, Inc. (NYSE:TR) is the least popular one with only 11 bullish hedge fund positions. Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately TRHC wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); TRHC investors were disappointed as the stock returned -22.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
