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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 NantHealth, Inc. (NASDAQ:NH) in this article.
Is NantHealth (NH) a good stock to buy now? NH investors should be aware of an increase in activity from the world's largest hedge funds of late. NantHealth, Inc. (NASDAQ:NH) was in 5 hedge funds' portfolios at the end of September. The all time high for this statistics is 7. There were 3 hedge funds in our database with NH positions at the end of the second quarter. Our calculations also showed that NH 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.
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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 take a peek at the latest hedge fund action encompassing NantHealth, Inc. (NASDAQ:NH).
What does smart money think about NantHealth, Inc. (NASDAQ:NH)?
Heading into the fourth quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 67% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in NH over the last 21 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of NantHealth, Inc. (NASDAQ:NH), with a stake worth $1.4 million reported as of the end of September. Trailing Renaissance Technologies was AQR Capital Management, which amassed a stake valued at $0.9 million. Arrowstreet Capital, Two Sigma Advisors, and Millennium 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 AQR Capital Management allocated the biggest weight to NantHealth, Inc. (NASDAQ:NH), around 0.0015% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0014 percent of its 13F equity portfolio to NH.
As industrywide interest jumped, some big names have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, established the most outsized position in NantHealth, Inc. (NASDAQ:NH). AQR Capital Management had $0.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $0.6 million position during the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as NantHealth, Inc. (NASDAQ:NH) but similarly valued. These stocks are Northwest Pipe Company (NASDAQ:NWPX), Escalade, Inc. (NASDAQ:ESCA), InfuSystem Holdings, Inc. (NYSE:INFU), Invacare Corporation (NYSE:IVC), BBX Capital Corporation (NYSE:BBX), CECO Environmental Corp. (NASDAQ:CECE), and RADA Electronic Industries Ltd. (NASDAQ:RADA). This group of stocks' market caps are closest to NH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWPX,10,35388,-3 ESCA,9,16436,1 INFU,12,33703,6 IVC,17,60394,-1 BBX,9,17576,-2 CECE,10,48633,2 RADA,7,16874,0 Average,10.6,32715,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $3 million in NH's case. Invacare Corporation (NYSE:IVC) is the most popular stock in this table. On the other hand RADA Electronic Industries Ltd. (NASDAQ:RADA) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks NantHealth, Inc. (NASDAQ:NH) is even less popular than RADA. Our overall hedge fund sentiment score for NH is 28.4. 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. Hedge funds dodged a bullet by taking a bearish stance towards NH. Our calculations showed that the top 20 most popular hedge fund stocks 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 November 27th but managed to beat the market again by 16.1 percentage points. Unfortunately NH wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); NH investors were disappointed as the stock returned 4.3% since the end of the third quarter (through 11/27) 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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.