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Hedge Funds Aren’t Crazy About eHealth, Inc. (EHTH) Anymore

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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded eHealth, Inc. (NASDAQ:EHTH) based on those filings.

eHealth, Inc. (NASDAQ:EHTH) investors should pay attention to a decrease in hedge fund sentiment in recent months. eHealth, Inc. (NASDAQ:EHTH) was in 23 hedge funds' portfolios at the end of March. The all time high for this statistic is 35. There were 24 hedge funds in our database with EHTH holdings at the end of December. Our calculations also showed that EHTH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

At the moment there are a multitude of gauges market participants put to use to assess publicly traded companies. A pair of the most innovative gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can trounce their index-focused peers by a very impressive amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Arthur B Cohen and Joseph Healey of Healthcor Management LP

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. Now let's view the fresh hedge fund action regarding eHealth, Inc. (NASDAQ:EHTH).

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

At first quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards EHTH over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Starboard Value LP held the most valuable stake in eHealth, Inc. (NASDAQ:EHTH), which was worth $138.1 million at the end of the fourth quarter. On the second spot was Hudson Executive Capital which amassed $109.2 million worth of shares. Palo Alto Investors, Citadel Investment Group, and Nantahala Capital Management 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 Headlands Capital allocated the biggest weight to eHealth, Inc. (NASDAQ:EHTH), around 10.77% of its 13F portfolio. Hudson Executive Capital is also relatively very bullish on the stock, setting aside 6.78 percent of its 13F equity portfolio to EHTH.

Due to the fact that eHealth, Inc. (NASDAQ:EHTH) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of money managers that slashed their full holdings last quarter. At the top of the heap, OrbiMed Advisors said goodbye to the biggest stake of the "upper crust" of funds tracked by Insider Monkey, worth about $59.6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell's fund, Arrowstreet Capital, also dropped its stock, about $33.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 1 funds last quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as eHealth, Inc. (NASDAQ:EHTH) but similarly valued. We will take a look at Eldorado Gold Corp (NYSE:EGO), Seres Therapeutics Inc (NASDAQ:MCRB), Retail Opportunity Investments Corp (NASDAQ:ROIC), Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY), PROS Holdings, Inc. (NYSE:PRO), SM Energy Company (NYSE:SM), and Sundial Growers Inc. (NASDAQ:SNDL). This group of stocks' market valuations are closest to EHTH's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGO,16,164708,2 MCRB,19,390565,2 ROIC,18,56076,1 HRMY,10,178876,2 PRO,12,268268,-8 SM,16,237416,-4 SNDL,7,18832,5 Average,14,187820,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $473 million in EHTH's case. Seres Therapeutics Inc (NASDAQ:MCRB) is the most popular stock in this table. On the other hand Sundial Growers Inc. (NASDAQ:SNDL) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks eHealth, Inc. (NASDAQ:EHTH) is more popular among hedge funds. Our overall hedge fund sentiment score for EHTH is 73.7. 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. 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 still beat the market by 7.7 percentage points. Unfortunately EHTH wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EHTH were disappointed as the stock returned -19.9% since the end of the first quarter (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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.