Is Clover Health Investments, Corp. (CLOV) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Clover Health Investments, Corp. (NASDAQ:CLOV).

Is CLOV a good stock to buy? Hedge funds were buying. The number of bullish hedge fund bets advanced by 23 in recent months. Clover Health Investments, Corp. (NASDAQ:CLOV) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that CLOV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are numerous metrics shareholders put to use to evaluate stocks. A duo of the most under-the-radar metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outpace the S&P 500 by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Joseph Edelman of Perceptive Advisors

Joseph Edelman of Perceptive Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding Clover Health Investments, Corp. (NASDAQ:CLOV).

Do Hedge Funds Think CLOV Is A Good Stock To Buy Now?

At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CLOV a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Greenoaks Capital was the largest shareholder of Clover Health Investments, Corp. (NASDAQ:CLOV), with a stake worth $728.3 million reported as of the end of March. Trailing Greenoaks Capital was Senator Investment Group, which amassed a stake valued at $37.8 million. Perceptive Advisors, Lakewood Capital Management, and Weiss Asset 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 Greenoaks Capital allocated the biggest weight to Clover Health Investments, Corp. (NASDAQ:CLOV), around 4.92% of its 13F portfolio. Senator Investment Group is also relatively very bullish on the stock, earmarking 0.78 percent of its 13F equity portfolio to CLOV.

Now, key money managers have jumped into Clover Health Investments, Corp. (NASDAQ:CLOV) headfirst. Greenoaks Capital, managed by Neil Mehta, assembled the largest position in Clover Health Investments, Corp. (NASDAQ:CLOV). Greenoaks Capital had $728.3 million invested in the company at the end of the quarter. Doug Silverman and Alexander Klabin’s Senator Investment Group also made a $37.8 million investment in the stock during the quarter. The following funds were also among the new CLOV investors: Joseph Edelman’s Perceptive Advisors, Anthony Bozza’s Lakewood Capital Management, and Andrew Weiss’s Weiss Asset Management.

Let’s go over hedge fund activity in other stocks similar to Clover Health Investments, Corp. (NASDAQ:CLOV). These stocks are Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Seer, Inc. (NASDAQ:SEER), Poshmark, Inc. (NASDAQ:POSH), Hecla Mining Company (NYSE:HL), Momo Inc (NASDAQ:MOMO), Signet Jewelers Limited (NYSE:SIG), and Integer Holdings Corporation (NYSE:ITGR). This group of stocks’ market values are similar to CLOV’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KLIC 34 428667 -2
SEER 12 342872 -2
POSH 14 26589 14
HL 16 39714 6
MOMO 25 342421 1
SIG 26 945716 -4
ITGR 16 217349 -8
Average 20.4 334761 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $823 million in CLOV’s case. Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) is the most popular stock in this table. On the other hand Seer, Inc. (NASDAQ:SEER) is the least popular one with only 12 bullish hedge fund positions. Clover Health Investments, Corp. (NASDAQ:CLOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CLOV is 50. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately CLOV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CLOV were disappointed as the stock returned 8.5% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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