Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 823 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about PRA Health Sciences Inc (NASDAQ:PRAH).
Is PRA Health Sciences Inc (NASDAQ:PRAH) the right investment to pursue these days? Investors who are in the know were turning bullish. The number of bullish hedge fund positions inched up by 4 lately. PRA Health Sciences Inc (NASDAQ:PRAH) was in 33 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. Our calculations also showed that PRAH isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
In today’s marketplace there are dozens of indicators stock market investors can use to value stocks. A couple of the most useful indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform the broader indices by a solid margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now we’re going to take a look at the fresh hedge fund action regarding PRA Health Sciences Inc (NASDAQ:PRAH).
What does smart money think about PRA Health Sciences Inc (NASDAQ:PRAH)?
Heading into the third quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 25 hedge funds with a bullish position in PRAH 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’s AQR Capital Management has the number one position in PRA Health Sciences Inc (NASDAQ:PRAH), worth close to $57.1 million, accounting for 0.1% of its total 13F portfolio. On AQR Capital Management’s heels is Redmile Group, led by Jeremy Green, holding a $27.2 million position; 0.5% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish consist of Ken Fisher’s Fisher Asset Management, Israel Englander’s Millennium Management and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management. In terms of the portfolio weights assigned to each position Sectoral Asset Management allocated the biggest weight to PRA Health Sciences Inc (NASDAQ:PRAH), around 0.89% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, dishing out 0.5 percent of its 13F equity portfolio to PRAH.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, initiated the largest position in PRA Health Sciences Inc (NASDAQ:PRAH). Millennium Management had $17.8 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also made a $2.2 million investment in the stock during the quarter. The other funds with brand new PRAH positions are Renaissance Technologies, Greg Eisner’s Engineers Gate Manager, and Lee Ainslie’s Maverick Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PRA Health Sciences Inc (NASDAQ:PRAH) but similarly valued. We will take a look at Herbalife Nutrition Ltd. (NYSE:HLF), LPL Financial Holdings Inc (NASDAQ:LPLA), BanColombia S.A. (NYSE:CIB), Assurant, Inc. (NYSE:AIZ), Encompass Health Corporation (NYSE:EHC), ADT Inc. (NYSE:ADT), and Adaptive Biotechnologies Corporation (NASDAQ:ADPT). This group of stocks’ market caps match PRAH’s market cap.
|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 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $1176 million. That figure was $170 million in PRAH’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 9 bullish hedge fund positions. PRA Health Sciences Inc (NASDAQ:PRAH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PRAH is 70.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately PRAH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PRAH were disappointed as the stock returned 0.2% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.