Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards 1Life Healthcare, Inc. (NASDAQ:ONEM) to find out whether there were any major changes in hedge funds’ views.
Is ONEM a good stock to buy now? 1Life Healthcare, Inc. (NASDAQ:ONEM) investors should be aware of an increase in support from the world’s most elite money managers recently. 1Life Healthcare, Inc. (NASDAQ:ONEM) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 20 hedge funds in our database with ONEM positions at the end of the second quarter. Our calculations also showed that ONEM 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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. With all of this in mind let’s take a gander at the new hedge fund action surrounding 1Life Healthcare, Inc. (NASDAQ:ONEM).
Do Hedge Funds Think ONEM Is A Good Stock To Buy Now?
At third quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in ONEM a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in 1Life Healthcare, Inc. (NASDAQ:ONEM) was held by Maverick Capital, which reported holding $112.2 million worth of stock at the end of September. It was followed by Redmile Group with a $94.9 million position. Other investors bullish on the company included 12 West Capital Management, Alyeska Investment Group, and Woodline Partners. In terms of the portfolio weights assigned to each position Maverick Capital allocated the biggest weight to 1Life Healthcare, Inc. (NASDAQ:ONEM), around 2.09% of its 13F portfolio. 12 West Capital Management is also relatively very bullish on the stock, designating 1.93 percent of its 13F equity portfolio to ONEM.
As aggregate interest increased, some big names were breaking ground themselves. 12 West Capital Management, managed by Joel Ramin, established the biggest position in 1Life Healthcare, Inc. (NASDAQ:ONEM). 12 West Capital Management had $39.7 million invested in the company at the end of the quarter. Peter S. Park’s Park West Asset Management also made a $13.1 million investment in the stock during the quarter. The other funds with brand new ONEM positions are John Overdeck and David Siegel’s Two Sigma Advisors, Highbridge Capital Management, and Jonathan Barrett and Paul Segal’s Luminus Management.
Let’s also examine hedge fund activity in other stocks similar to 1Life Healthcare, Inc. (NASDAQ:ONEM). These stocks are JBG SMITH Properties (NYSE:JBGS), UniFirst Corp (NYSE:UNF), Enstar Group Ltd. (NASDAQ:ESGR), Apache Corporation (NYSE:APA), bluebird bio Inc (NASDAQ:BLUE), TCF Financial Corporation (NYSE:TCF), and Flowserve Corporation (NYSE:FLS). This group of stocks’ market valuations match ONEM’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.3 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $378 million in ONEM’s case. Apache Corporation (NYSE:APA) is the most popular stock in this table. On the other hand TCF Financial Corporation (NYSE:TCF) is the least popular one with only 11 bullish hedge fund positions. 1Life Healthcare, Inc. (NASDAQ:ONEM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ONEM is 54.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on ONEM as the stock returned 31.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.