The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of American Well Corporation (NYSE:AMWL).
Is AMWL a good stock to buy? American Well Corporation (NYSE:AMWL) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds' portfolios at the end of March. Our calculations also showed that AMWL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare AMWL to other stocks including ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Avnet, Inc. (NYSE:AVT), and Hutchison China MediTech Limited (NASDAQ:HCM) to get a better sense of its popularity.
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
James E. Flynn of Deerfield Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's analyze the fresh hedge fund action regarding American Well Corporation (NYSE:AMWL).
Do Hedge Funds Think AMWL Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AMWL over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Bridger Management was the largest shareholder of American Well Corporation (NYSE:AMWL), with a stake worth $28.3 million reported as of the end of March. Trailing Bridger Management was VGI Partners, which amassed a stake valued at $18.4 million. Deerfield Management, Islet Management, and Alyeska Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Bridger Management allocated the biggest weight to American Well Corporation (NYSE:AMWL), around 2.64% of its 13F portfolio. VGI Partners is also relatively very bullish on the stock, designating 1.63 percent of its 13F equity portfolio to AMWL.
Because American Well Corporation (NYSE:AMWL) has experienced falling interest from the smart money, we can see that there was a specific group of hedgies who were dropping their full holdings by the end of the first quarter. Intriguingly, Jerome Pfund and Michael Sjostrom's Sectoral Asset Management dropped the largest investment of the "upper crust" of funds followed by Insider Monkey, valued at an estimated $18.3 million in stock. Daniel S. Och's fund, OZ Management, also dumped its stock, about $4.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to American Well Corporation (NYSE:AMWL). These stocks are ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), Avnet, Inc. (NYSE:AVT), Hutchison China MediTech Limited (NASDAQ:HCM), Qualys Inc (NASDAQ:QLYS), Alignment Healthcare, Inc. (NASDAQ:ALHC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), and The Goodyear Tire & Rubber Company (NASDAQ:GT). All of these stocks' market caps are closest to AMWL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACAD,33,1482361,-5 AVT,27,850445,2 HCM,8,27401,2 QLYS,12,213773,-10 ALHC,17,93639,17 CBRL,16,163644,-10 GT,23,429776,-4 Average,19.4,465863,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $466 million. That figure was $145 million in AMWL's case. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 8 bullish hedge fund positions. American Well Corporation (NYSE:AMWL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMWL is 49.8. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately AMWL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AMWL investors were disappointed as the stock returned -37.5% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.