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Is GoodRx Holdings, Inc. (GDRX) Going to Burn These Hedge Funds?

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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. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards GoodRx Holdings, Inc. (NASDAQ:GDRX).

GoodRx Holdings, Inc. (NASDAQ:GDRX) was in 24 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. GDRX investors should be aware of a decrease in support from the world's most elite money managers of late. There were 32 hedge funds in our database with GDRX holdings at the end of December. Our calculations also showed that GDRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Chase Coleman of Tiger Global

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 we're going to take a look at the key hedge fund action regarding GoodRx Holdings, Inc. (NASDAQ:GDRX).

Do Hedge Funds Think GDRX Is A Good Stock To Buy Now?

At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards GDRX over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in GoodRx Holdings, Inc. (NASDAQ:GDRX) was held by Silver Lake Partners, which reported holding $118.2 million worth of stock at the end of December. It was followed by Tiger Global Management LLC with a $83.7 million position. Other investors bullish on the company included Zevenbergen Capital Investments, Light Street Capital, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Rip Road Capital allocated the biggest weight to GoodRx Holdings, Inc. (NASDAQ:GDRX), around 4.8% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, designating 3.69 percent of its 13F equity portfolio to GDRX.

Judging by the fact that GoodRx Holdings, Inc. (NASDAQ:GDRX) has experienced declining sentiment from the smart money, logic holds that there was a specific group of fund managers who were dropping their full holdings heading into Q2. Intriguingly, Frank Fu's CaaS Capital dropped the largest stake of the "upper crust" of funds watched by Insider Monkey, valued at about $18.3 million in stock, and Jack Woodruff's Candlestick Capital Management was right behind this move, as the fund sold off about $15.1 million worth. These moves are important to note, as total hedge fund interest dropped by 8 funds heading into Q2.

Let's now review hedge fund activity in other stocks similar to GoodRx Holdings, Inc. (NASDAQ:GDRX). We will take a look at Avery Dennison Corporation (NYSE:AVY), Campbell Soup Company (NYSE:CPB), PagSeguro Digital Ltd. (NYSE:PAGS), Cenovus Energy Inc (NYSE:CVE), VICI Properties Inc. (NYSE:VICI), GDS Holdings Limited (NASDAQ:GDS), and Entegris Inc (NASDAQ:ENTG). This group of stocks' market caps are similar to GDRX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVY,20,300350,-3 CPB,28,345398,-1 PAGS,33,1804603,8 CVE,23,379693,0 VICI,41,875487,3 GDS,40,2080333,1 ENTG,23,1484733,-7 Average,29.7,1038657,0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $1039 million. That figure was $488 million in GDRX's case. VICI Properties Inc. (NYSE:VICI) is the most popular stock in this table. On the other hand Avery Dennison Corporation (NYSE:AVY) is the least popular one with only 20 bullish hedge fund positions. GoodRx Holdings, Inc. (NASDAQ:GDRX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GDRX is 24.1. 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 GDRX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GDRX investors were disappointed as the stock returned -24.1% 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.