This Metric Says You Are Smart to Sell eHealth, Inc. (EHTH): Erie Indemnity Company (ERIE), National Financial Partners Corp. (NFP)

Is eHealth, Inc. (NASDAQ:EHTH) a buy, sell, or hold? The smart money is in a bearish mood. The number of bullish hedge fund bets decreased by 1 lately.

eHealth, Inc. (NASDAQ:EHTH)

In the 21st century investor’s toolkit, there are dozens of gauges investors can use to watch publicly traded companies. A pair of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the S&P 500 by a superb amount (see just how much).

Equally as key, positive insider trading activity is another way to parse down the marketplace. There are plenty of stimuli for an executive to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

Consequently, let’s take a look at the recent action surrounding eHealth, Inc. (NASDAQ:EHTH).

How have hedgies been trading eHealth, Inc. (NASDAQ:EHTH)?

Heading into 2013, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially.

According to our comprehensive database, Arthur B Cohen and Joseph Healey’s Healthcor Management LP had the most valuable position in eHealth, Inc. (NASDAQ:EHTH), worth close to $65 million, accounting for 3.5% of its total 13F portfolio. The second largest stake is held by D. E. Shaw of D E Shaw, with a $10 million position; 0% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Donald Chiboucis’s Columbus Circle Investors and John Overdeck and David Siegel’s Two Sigma Advisors.

Because eHealth, Inc. (NASDAQ:EHTH) has experienced falling interest from the aggregate hedge fund industry, logic holds that there were a few hedgies who were dropping their entire stakes heading into 2013. It’s worth mentioning that James E. Flynn’s Deerfield Management dropped the largest stake of the “upper crust” of funds we track, comprising about $7 million in stock., and SAC Subsidiary of CR Intrinsic Investors was right behind this move, as the fund dropped about $5 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds heading into 2013.

How have insiders been trading eHealth, Inc. (NASDAQ:EHTH)?

Insider buying is best served when the primary stock in question has seen transactions within the past six months. Over the last 180-day time period, eHealth, Inc. (NASDAQ:EHTH) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to eHealth, Inc. (NASDAQ:EHTH). These stocks are Erie Indemnity Company (NASDAQ:ERIE), National Financial Partners Corp. (NYSE:NFP), CorVel Corporation (NASDAQ:CRVL), CNinsure Inc. (ADR) (NASDAQ:CISG), and Crawford & Company (NYSE:CRD-B). This group of stocks are in the insurance brokers industry and their market caps match EHTH’s market cap.


Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Erie Indemnity Company (NASDAQ:ERIE) 9 1 2
National Financial Partners Corp. (NYSE:NFP) 15 0 0
CorVel Corporation (NASDAQ:CRVL) 5 0 4
CNinsure Inc. (ADR) (NASDAQ:CISG) 5 0 0
Crawford & Company (NYSE:CRD-B) 0 0

With the results shown by the aforementioned studies, retail investors should always pay attention to hedge fund and insider trading sentiment, and eHealth, Inc. (NASDAQ:EHTH) is no exception.

Click here to learn why you should track hedge funds