Is TRHC A Good Stock To Buy Now?

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC).

Is TRHC a good stock to buy now? Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) investors should pay attention to an increase in hedge fund sentiment recently. Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 14. Our calculations also showed that TRHC 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Ken Griffin of Citadel Investment Group

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 we’re going to take a look at the latest hedge fund action regarding Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC).

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

Heading into the fourth quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in TRHC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, John Osterweis’s Osterweis Capital Management has the most valuable position in Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), worth close to $3.1 million, corresponding to 0.2% of its total 13F portfolio. On Osterweis Capital Management’s heels is Royce & Associates, managed by Chuck Royce, which holds a $1.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Ken Griffin’s Citadel Investment Group and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Osterweis Capital Management allocated the biggest weight to Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), around 0.21% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, designating 0.12 percent of its 13F equity portfolio to TRHC.

As aggregate interest increased, specific money managers have jumped into Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) headfirst. Citadel Investment Group, managed by Ken Griffin, established the biggest position in Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). Citadel Investment Group had $1.3 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $0.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is Jinghua Yan’s TwinBeech Capital.

Let’s go over hedge fund activity in other stocks similar to Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC). These stocks are SecureWorks Corp. (NASDAQ:SCWX), Hope Bancorp, Inc. (NASDAQ:HOPE), The E.W. Scripps Company (NASDAQ:SSP), Heska Corp (NASDAQ:HSKA), e.l.f. Beauty, Inc. (NYSE:ELF), Replimune Group, Inc. (NASDAQ:REPL), and Arvinas, Inc. (NASDAQ:ARVN). This group of stocks’ market values are closest to TRHC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SCWX 12 13864 -1
HOPE 17 53210 -2
SSP 14 97977 0
HSKA 15 155088 1
ELF 24 230236 2
REPL 14 169325 3
ARVN 26 181239 -5
Average 17.4 128706 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $10 million in TRHC’s case. Arvinas, Inc. (NASDAQ:ARVN) is the most popular stock in this table. On the other hand SecureWorks Corp. (NASDAQ:SCWX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is even less popular than SCWX. Our overall hedge fund sentiment score for TRHC is 25.3. 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 TRHC. 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 TRHC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TRHC investors were disappointed as the stock returned -10.3% 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.

Follow Tabula Rasa Healthcare Inc. (NASDAQ:TRHC)

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