Is HCAT A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 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 September 30th. In this article, we look at what those funds think of Health Catalyst, Inc (NASDAQ:HCAT) based on that data.

Is HCAT a good stock to buy now? Health Catalyst, Inc (NASDAQ:HCAT) investors should pay attention to an increase in hedge fund interest in recent months. Health Catalyst, Inc (NASDAQ:HCAT) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 13 hedge funds in our database with HCAT positions at the end of the second quarter. Our calculations also showed that HCAT 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.

If you’d ask most shareholders, hedge funds are seen as unimportant, outdated financial vehicles of the past. While there are over 8000 funds in operation today, We look at the upper echelon of this group, approximately 850 funds. These money managers administer bulk of the smart money’s total capital, and by shadowing their unrivaled picks, Insider Monkey has determined numerous investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

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. Keeping this in mind let’s take a peek at the new hedge fund action surrounding Health Catalyst, Inc (NASDAQ:HCAT).

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

Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2020. On the other hand, there were a total of 13 hedge funds with a bullish position in HCAT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Health Catalyst, Inc (NASDAQ:HCAT) was held by Marshall Wace LLP, which reported holding $31.5 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $29.8 million position. Other investors bullish on the company included Rock Springs Capital Management, Perceptive Advisors, and Impax Asset Management. In terms of the portfolio weights assigned to each position Adams Street Partners allocated the biggest weight to Health Catalyst, Inc (NASDAQ:HCAT), around 1.75% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, earmarking 0.65 percent of its 13F equity portfolio to HCAT.

As industrywide interest jumped, some big names were breaking ground themselves. Impax Asset Management, managed by Ian Simm, assembled the largest position in Health Catalyst, Inc (NASDAQ:HCAT). Impax Asset Management had $7.3 million invested in the company at the end of the quarter. Jeffrey Diehl’s Adams Street Partners also made a $6.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Dmitry Balyasny’s Balyasny Asset Management, and Brandon Haley’s Holocene Advisors.

Let’s now take a look at hedge fund activity in other stocks similar to Health Catalyst, Inc (NASDAQ:HCAT). We will take a look at Domtar Corporation (NYSE:UFS), American Assets Trust, Inc (NYSE:AAT), AeroVironment, Inc. (NASDAQ:AVAV), Cactus, Inc. (NYSE:WHD), Delphi Technologies PLC (NYSE:DLPH), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), and Kymera Therapeutics, Inc. (NASDAQ:KYMR). All of these stocks’ market caps are closest to HCAT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UFS 24 218760 -3
AAT 15 29076 -5
AVAV 16 49345 -1
WHD 20 103650 -2
DLPH 29 397481 2
IRWD 24 297292 -8
KYMR 22 313705 22
Average 21.4 201330 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $131 million in HCAT’s case. Delphi Technologies PLC (NYSE:DLPH) is the most popular stock in this table. On the other hand American Assets Trust, Inc (NYSE:AAT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Health Catalyst, Inc (NASDAQ:HCAT) is even less popular than AAT. Our overall hedge fund sentiment score for HCAT is 36. 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. Hedge funds dodged a bullet by taking a bearish stance towards HCAT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately HCAT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); HCAT investors were disappointed as the stock returned 6.3% since the end of the third quarter (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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