At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Benefitfocus Inc (NASDAQ:BNFT) makes for a good investment right now.
Is BNFT a good stock to buy now? Benefitfocus Inc (NASDAQ:BNFT) has seen an increase in enthusiasm from smart money recently. Benefitfocus Inc (NASDAQ:BNFT) was in 18 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. There were 13 hedge funds in our database with BNFT holdings at the end of June. Our calculations also showed that BNFT isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 21st century investor’s toolkit there are plenty of indicators stock market investors can use to appraise stocks. A duo of the most innovative indicators are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outclass the market by a significant margin (see the details here).
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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind let’s take a peek at the recent hedge fund action regarding Benefitfocus Inc (NASDAQ:BNFT).
Do Hedge Funds Think BNFT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in BNFT a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Indaba Capital Management was the largest shareholder of Benefitfocus Inc (NASDAQ:BNFT), with a stake worth $18.1 million reported as of the end of September. Trailing Indaba Capital Management was Toronado Partners, which amassed a stake valued at $10.4 million. Ancient Art (Teton Capital), Two Sigma Advisors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Indaba Capital Management allocated the biggest weight to Benefitfocus Inc (NASDAQ:BNFT), around 5.74% of its 13F portfolio. Toronado Partners is also relatively very bullish on the stock, dishing out 2.9 percent of its 13F equity portfolio to BNFT.
Consequently, key hedge funds have jumped into Benefitfocus Inc (NASDAQ:BNFT) headfirst. Indaba Capital Management, managed by Derek C. Schrier, assembled the largest position in Benefitfocus Inc (NASDAQ:BNFT). Indaba Capital Management had $18.1 million invested in the company at the end of the quarter. Quincy Lee’s Ancient Art (Teton Capital) also initiated a $7.5 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Cynthia Paul’s Lynrock Lake, and Phil Frohlich’s Prescott Group Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Benefitfocus Inc (NASDAQ:BNFT) but similarly valued. We will take a look at Alexco Resource Corp. (NYSE:AXU), AdvanSix Inc. (NYSE:ASIX), Urstadt Biddle Properties Inc (NYSE:UBA), Sutro Biopharma, Inc. (NASDAQ:STRO), Insteel Industries Inc (NASDAQ:IIIN), Akebia Therapeutics Inc (NASDAQ:AKBA), and NextDecade Corporation (NASDAQ:NEXT). All of these stocks’ market caps match BNFT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $84 million. That figure was $54 million in BNFT’s case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand Alexco Resource Corp. (NYSE:AXU) is the least popular one with only 2 bullish hedge fund positions. Benefitfocus Inc (NASDAQ:BNFT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BNFT is 72.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on BNFT as the stock returned 21.3% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.