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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about GoHealth, Inc. (NASDAQ:GOCO) in this article.
Is GOCO a good stock to buy now? Money managers were in an optimistic mood. The number of bullish hedge fund bets increased by 17 lately. GoHealth, Inc. (NASDAQ:GOCO) was in 17 hedge funds' portfolios at the end of September. Our calculations also showed that GOCO 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.
According to most stock holders, hedge funds are seen as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation today, Our researchers look at the leaders of this group, approximately 850 funds. Most estimates calculate that this group of people administer most of all hedge funds' total capital, and by tailing their finest stock picks, Insider Monkey has figured out many investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
James E. Flynn of Deerfield Management
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. With all of this in mind we're going to view the new hedge fund action encompassing GoHealth, Inc. (NASDAQ:GOCO).
Do Hedge Funds Think GOCO Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in GOCO a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Centerbridge Partners held the most valuable stake in GoHealth, Inc. (NASDAQ:GOCO), which was worth $529.9 million at the end of the third quarter. On the second spot was Viking Global which amassed $61 million worth of shares. Deerfield Management, Point72 Asset Management, and Holocene Advisors 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 Centerbridge Partners allocated the biggest weight to GoHealth, Inc. (NASDAQ:GOCO), around 59.3% of its 13F portfolio. Prana Capital Management is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to GOCO.
As aggregate interest increased, specific money managers have been driving this bullishness. Centerbridge Partners, managed by Mark T. Gallogly, created the largest position in GoHealth, Inc. (NASDAQ:GOCO). Centerbridge Partners had $529.9 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also initiated a $61 million position during the quarter. The following funds were also among the new GOCO investors: James E. Flynn's Deerfield Management, Steve Cohen's Point72 Asset Management, and Brandon Haley's Holocene Advisors.
Let's go over hedge fund activity in other stocks similar to GoHealth, Inc. (NASDAQ:GOCO). We will take a look at Silgan Holdings Inc. (NASDAQ:SLGN), NeoGenomics, Inc. (NASDAQ:NEO), Nexstar Media Group, Inc. (NASDAQ:NXST), The Timken Company (NYSE:TKR), Mattel, Inc. (NASDAQ:MAT), Companhia Siderurgica Nacional (NYSE:SID), and Acuity Brands, Inc. (NYSE:AYI). All of these stocks' market caps are similar to GOCO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SLGN,15,207950,-4 NEO,17,78934,-2 NXST,41,731820,-1 TKR,34,240044,3 MAT,26,724311,1 SID,7,35104,0 AYI,38,836103,0 Average,25.4,407752,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $634 million in GOCO's case. Nexstar Media Group, Inc. (NASDAQ:NXST) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 7 bullish hedge fund positions. GoHealth, Inc. (NASDAQ:GOCO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GOCO is 33.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately GOCO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); GOCO investors were disappointed as the stock returned 8.2% since the end of September (through 12/14) 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 in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.