Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Definitive Healthcare Corp. (NASDAQ:DH) in this article.
Is DH a good stock to buy now? Prominent investors were buying. The number of bullish hedge fund bets advanced by 23 lately. Definitive Healthcare Corp. (NASDAQ:DH) was in 23 hedge funds’ portfolios at the end of September. Our calculations also showed that DH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Chase Coleman of Tiger Global
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to check out the recent hedge fund action surrounding Definitive Healthcare Corp. (NASDAQ:DH).
Do Hedge Funds Think DH Is A Good Stock To Buy Now?
At the end of September, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in DH a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Greg Poole’s Echo Street Capital Management has the number one position in Definitive Healthcare Corp. (NASDAQ:DH) , worth close to $45.2 million, accounting for 0.3% of its total 13F portfolio. On Echo Street Capital Management’s heels is Tiger Global Management LLC, led by Chase Coleman, holding a $25.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism include Ken Griffin’s Citadel Investment Group, Brandon Haley’s Holocene Advisors and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Definitive Healthcare Corp. (NASDAQ:DH) , around 0.83% of its 13F portfolio. Light Street Capital is also relatively very bullish on the stock, setting aside 0.81 percent of its 13F equity portfolio to DH.
As aggregate interest increased, specific money managers were breaking ground themselves. Echo Street Capital Management, managed by Greg Poole, initiated the biggest position in Definitive Healthcare Corp. (NASDAQ:DH) . Echo Street Capital Management had $45.2 million invested in the company at the end of the quarter. Chase Coleman’s Tiger Global Management LLC also made a $25.7 million investment in the stock during the quarter. The other funds with brand new DH positions are Ken Griffin’s Citadel Investment Group, Brandon Haley’s Holocene Advisors, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to Definitive Healthcare Corp. (NASDAQ:DH) . We will take a look at Moelis & Company (NYSE:MC), Summit Materials Inc (NYSE:SUM), Fabrinet (NYSE:FN), MaxLinear, Inc. (NYSE:MXL), MultiPlan Corporation (NYSE:MPLN), Brighthouse Financial, Inc. (NASDAQ:BHF), and Atlas Corp. (NYSE:ATCO). This group of stocks’ market caps are closest to DH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MC | 25 | 147307 | 7 |
| SUM | 21 | 108335 | 1 |
| FN | 18 | 157879 | 4 |
| MXL | 24 | 155869 | 3 |
| MPLN | 27 | 298077 | 11 |
| BHF | 29 | 458644 | 3 |
| ATCO | 15 | 1453087 | -3 |
| Average | 22.7 | 397028 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $397 million. That figure was $210 million in DH’s case. Brighthouse Financial, Inc. (NASDAQ:BHF) is the most popular stock in this table. On the other hand Atlas Corp. (NYSE:ATCO) is the least popular one with only 15 bullish hedge fund positions. Definitive Healthcare Corp. (NASDAQ:DH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DH is 55.7. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately DH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DH were disappointed as the stock returned -25.2% since the end of September (through 12/9) 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.