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Is Livongo Health, Inc. (LVGO) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Livongo Health, Inc. (NASDAQ:LVGO).

Is Livongo Health, Inc. (NASDAQ:LVGO) a buy right now? Investors who are in the know are turning less bullish. The number of bullish hedge fund bets retreated by 1 lately. Our calculations also showed that LVGO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). LVGO was in 17 hedge funds’ portfolios at the end of the first quarter of 2020. There were 18 hedge funds in our database with LVGO holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Atterbury - Whetstone Capital

David Atterbury of Whetstone Capital Advisors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the recent hedge fund action regarding Livongo Health, Inc. (NASDAQ:LVGO).

How have hedgies been trading Livongo Health, Inc. (NASDAQ:LVGO)?

Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the fourth quarter of 2019. On the other hand, there were a total of 0 hedge funds with a bullish position in LVGO 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.

The largest stake in Livongo Health, Inc. (NASDAQ:LVGO) was held by Matrix Capital Management, which reported holding $21.9 million worth of stock at the end of September. It was followed by Inherent Group with a $9 million position. Other investors bullish on the company included Renaissance Technologies, Whetstone Capital Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Inherent Group allocated the biggest weight to Livongo Health, Inc. (NASDAQ:LVGO), around 11.11% of its 13F portfolio. Whetstone Capital Advisors is also relatively very bullish on the stock, setting aside 2.91 percent of its 13F equity portfolio to LVGO.

Judging by the fact that Livongo Health, Inc. (NASDAQ:LVGO) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedgies who sold off their entire stakes last quarter. It’s worth mentioning that John Smith Clark’s Southpoint Capital Advisors said goodbye to the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth close to $30.1 million in stock, and Farallon Capital was right behind this move, as the fund sold off about $15 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Livongo Health, Inc. (NASDAQ:LVGO). We will take a look at Cosan Limited (NYSE:CZZ), Blackbaud, Inc. (NASDAQ:BLKB), Sanderson Farms, Inc. (NASDAQ:SAFM), and GW Pharmaceuticals plc (NASDAQ:GWPH). This group of stocks’ market caps match LVGO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CZZ 15 141907 3
BLKB 22 107618 6
SAFM 17 330385 -19
GWPH 21 262831 -3
Average 18.75 210685 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $83 million in LVGO’s case. Blackbaud, Inc. (NASDAQ:BLKB) is the most popular stock in this table. On the other hand Cosan Limited (NYSE:CZZ) is the least popular one with only 15 bullish hedge fund positions. Livongo Health, Inc. (NASDAQ:LVGO) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on LVGO as the stock returned 162.6% during the second quarter and outperformed the market by an even larger margin.

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