5 Most Undervalued Penny Stocks To Buy According To Hedge Funds

1. MultiPlan Corporation (NYSE:MPLN)

Number of Hedge Fund Holders: 24

MultiPlan Corporation (NYSE:MPLN) is operating in the healthcare sector, providing data analytics and technology-enabled cost management solutions to healthcare companies. MultiPlan Corporation (NYSE:MPLN) has a PE ratio of 8.58 as of February 5. It is a popular penny stock among hedge funds. Of the 920 funds tracked by Insider Monkey, 24 funds had stakes in MultiPlan Corporation (NYSE:MPLN) as of the end of the third quarter of 2022. The net worth of these stakes was about $185 million. In November 2022, MultiPlan Corporation (NYSE:MPLN) posted third-quarter results. Its GAAP EPS in the period came in at $0.03, meeting estimates. Revenue in the period fell 13.1% on a YoY basis to $250.5 million. MultiPlan Corporation (NYSE:MPLN) updated its full-year 2022 guidance. It expects revenue of $1,075 million to $1,090 million in the period.

Diamond Hill Capital made the following comment about MultiPlan Corporation (NYSE:MPLN) in its Q3 2022 investor letter:

“On an individual holdings’ basis, top contributors to return in Q3 included short positions in MultiPlan Corporation (NYSE:MPLN), WD-40 Company and United Parcel Service (UPS). MultiPlan is a healthcare services business providing out-of-network cost management solutions to healthcare payors. In our view, MultiPlan was a compelling short opportunity due to a combination of a high valuation and several fundamental risk factors, including a high degree of customer concentration, rising regulatory risk and high leverage limiting its ability to seek strategic alternatives. In Q3, its share price reacted negatively after disclosing that one of its largest customers was renewing its contract on terms less favorable for MultiPlan — which was in line with our thesis. With the share price subsequently trading below our estimate of intrinsic value, we chose to cover the short position.”

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