Is Metromile, Inc. (MILE) A Good Stock To Buy?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Metromile, Inc. (NASDAQ:MILE) changed recently.

Is MILE a good stock to buy? The best stock pickers were getting more bullish. The number of long hedge fund bets improved by 19 recently. Metromile, Inc. (NASDAQ:MILE) was in 19 hedge funds’ portfolios at the end of March. Our calculations also showed that MILE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are several formulas stock traders can use to evaluate publicly traded companies. Some of the most useful formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can beat their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Aaron Cowen Suvretta Capital

Aaron Cowen of Suvretta Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. With all of this in mind let’s analyze the recent hedge fund action regarding Metromile, Inc. (NASDAQ:MILE).

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

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in MILE 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.

Is MILE A Good Stock To Buy?

More specifically, Nantahala Capital Management was the largest shareholder of Metromile, Inc. (NASDAQ:MILE), with a stake worth $25 million reported as of the end of March. Trailing Nantahala Capital Management was Millennium Management, which amassed a stake valued at $15.6 million. Suvretta Capital Management, Foxhaven Asset Management, and Citadel Investment Group 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 Ionic Capital Management allocated the biggest weight to Metromile, Inc. (NASDAQ:MILE), around 0.8% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, designating 0.73 percent of its 13F equity portfolio to MILE.

Consequently, key hedge funds were breaking ground themselves. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, initiated the most valuable position in Metromile, Inc. (NASDAQ:MILE). Nantahala Capital Management had $25 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $15.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Aaron Cowen’s Suvretta Capital Management, Michael Pausic’s Foxhaven Asset Management, and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks similar to Metromile, Inc. (NASDAQ:MILE). These stocks are Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX), Camtek LTD. (NASDAQ:CAMT), The Pennant Group, Inc. (NASDAQ:PNTG), Hawaiian Holdings, Inc. (NASDAQ:HA), City Holding Company (NASDAQ:CHCO), Home Point Capital Inc. (NASDAQ:HMPT), and Tootsie Roll Industries, Inc. (NYSE:TR). This group of stocks’ market caps match MILE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FMTX 17 628565 0
CAMT 12 117423 -3
PNTG 11 28651 1
HA 16 109242 5
CHCO 5 16561 -1
HMPT 13 35611 13
TR 14 34793 0
Average 12.6 138692 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $139 million. That figure was $106 million in MILE’s case. Forma Therapeutics Holdings, Inc. (NASDAQ:FMTX) is the most popular stock in this table. On the other hand City Holding Company (NASDAQ:CHCO) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Metromile, Inc. (NASDAQ:MILE) is more popular among hedge funds. Our overall hedge fund sentiment score for MILE is 90. 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. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately MILE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MILE were disappointed as the stock returned -30% since the end of the first quarter (through 7/16) 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 most of these stocks already outperformed the market since 2019.

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