Is eHealth, Inc. (EHTH) A Good Stock To Buy?

The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards eHealth, Inc. (NASDAQ:EHTH).

eHealth, Inc. (NASDAQ:EHTH) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of September. At the end of this article we will also compare EHTH to other stocks including MBT Financial Corp. (NASDAQ:MBTF), Home Bancorp, Inc. (NASDAQ:HBCP), and Summit Financial Group, Inc. (NASDAQ:SMMF) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What have hedge funds been doing with eHealth, Inc. (NASDAQ:EHTH)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EHTH over the last 5 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, James E. Flynn’s Deerfield Management has the number one position in eHealth, Inc. (NASDAQ:EHTH), worth close to $29.6 million, comprising 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is OrbiMed Advisors, led by Samuel Isaly, holding a $20.3 million position. Some other peers that are bullish include Mitchell Blutt’s Consonance Capital Management, Renaissance Technologies, one of the largest hedge funds in the world, and David Brown’s Hawk Ridge Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Judging by the fact that eHealth, Inc. (NASDAQ:EHTH) has gone through declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers who sold off their full holdings by the end of the third quarter. Interestingly, Jeremy Green’s Redmile Group dumped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising about $6 million in stock. Robert B. Gillam’s fund, McKinley Capital Management, also cut its stock, about $1.6 million worth.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as eHealth, Inc. (NASDAQ:EHTH) but similarly valued. We will take a look at MBT Financial Corp. (NASDAQ:MBTF), Home Bancorp, Inc. (NASDAQ:HBCP), Summit Financial Group, Inc. (NASDAQ:SMMF), and RadiSys Corporation (NASDAQ:RSYS). This group of stocks’ market valuations resemble EHTH’s market valuation.

As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $88 million in EHTH’s case. RadiSys Corporation (NASDAQ:RSYS) is the most popular stock in this table. On the other hand Home Bancorp, Inc. (NASDAQ:HBCP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks eHealth, Inc. (NASDAQ:EHTH) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None