Is EHTH Stock A Buy or Sell?

We at Insider Monkey have gone over 887 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 eHealth, Inc. (NASDAQ:EHTH) based on that data.

Is EHTH stock a buy? eHealth, Inc. (NASDAQ:EHTH) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. eHealth, Inc. (NASDAQ:EHTH) was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that EHTH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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

Heading into the first quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -31% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EHTH over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, OrbiMed Advisors held the most valuable stake in eHealth, Inc. (NASDAQ:EHTH), which was worth $59.6 million at the end of the fourth quarter. On the second spot was Hudson Executive Capital which amassed $53 million worth of shares. Palo Alto Investors, Arrowstreet Capital, and Nantahala Capital 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 Headlands Capital allocated the biggest weight to eHealth, Inc. (NASDAQ:EHTH), around 6.36% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, earmarking 4.43 percent of its 13F equity portfolio to EHTH.

Due to the fact that eHealth, Inc. (NASDAQ:EHTH) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few fund managers who were dropping their positions entirely heading into Q1. Interestingly, Ryan Frick and Oliver Evans’s Dorsal Capital Management sold off the largest stake of all the hedgies tracked by Insider Monkey, worth close to $39.5 million in stock. Stephen Perkins’s fund, Toronado Partners, also dropped its stock, about $27.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 11 funds heading into Q1.

Let’s now review hedge fund activity in other stocks similar to eHealth, Inc. (NASDAQ:EHTH). These stocks are Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), Mersana Therapeutics, Inc. (NASDAQ:MRSN), First Midwest Bancorp Inc (NASDAQ:FMBI), EnLink Midstream LLC (NYSE:ENLC), PRA Group, Inc. (NASDAQ:PRAA), Enviva Partners, LP (NYSE:EVA), and Piper Sandler Companies (NYSE:PIPR). This group of stocks’ market caps match EHTH’s market cap.

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As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $277 million in EHTH’s case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand EnLink Midstream LLC (NYSE:ENLC) is the least popular one with only 8 bullish hedge fund positions. eHealth, Inc. (NASDAQ:EHTH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EHTH is 50.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately EHTH wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on EHTH were disappointed as the stock returned -2.5% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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