Should You Still Consider Buying Inovalon Holdings (INOV)?

Bernzott Capital Advisors, an investment management firm, published its fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 24.41% was recorded by the fund in the fourth quarter of 2020, below its  R2000V and R2500V benchmarks that delivered a 33.36% and 28.51% return respectively in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Bernzott Capital Advisors, in their Q4 2020 investor letter, mentioned Inovalon Holdings, Inc. (NASDAQ: INOV) and emphasized their views on the company. Inovalon Holdings, Inc. is a Bowie, Maryland-based technology company that currently has a $4.3 billion market capitalization. Since the beginning of the year, INOV delivered a 51.35% return, impressively extending its 12-month gains to 81.76%. As of March 23, 2021, the stock closed at $27.50 per share.

Here is what Bernzott Capital Advisors has to say about Inovalon Holdings, Inc. in their Q4 2020 investor letter:

“Inovalon Holdings (INOV): After being a top contributor in 2Q, weakness in this healthcare cloud software provider’s legacy product line contributed to disappointing revenues and earnings, sending the stock down this quarter. Presumably, the market seized on the negatives and chose to look past favorable developments such as annualized contract value which rose over 30% and high renewal rates and customer retention. Many elements of our investment thesis remain in force, despite the short term set back, including rising recurring revenue and good profitability metrics.”

Olena Yakobchuk/

Our calculations show that Inovalon Holdings, Inc. (NASDAQ: INOV) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Inovalon Holdings, Inc. was in 22 hedge fund portfolios, compared to 20 funds in the third quarter. INOV delivered a 48.73% return in the past 3 months.