The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Phreesia, Inc. (NYSE:PHR) based on those filings.
Phreesia, Inc. (NYSE:PHR) has experienced a decrease in activity from the world’s largest hedge funds of late. Our calculations also showed that PHR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kris Jenner of Rock Springs Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a peek at the recent hedge fund action regarding Phreesia, Inc. (NYSE:PHR).
What have hedge funds been doing with Phreesia, Inc. (NYSE:PHR)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -50% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in PHR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in Phreesia, Inc. (NYSE:PHR), worth close to $23.2 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Rock Springs Capital Management, managed by Kris Jenner, Gordon Bussard, Graham McPhail, which holds a $11.9 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain Richard Driehaus’s Driehaus Capital, Justin John Ferayorni’s Tamarack Capital Management and Robert B. Gillam’s McKinley Capital Management. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to Phreesia, Inc. (NYSE:PHR), around 1.99% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, dishing out 0.49 percent of its 13F equity portfolio to PHR.
Because Phreesia, Inc. (NYSE:PHR) has witnessed a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their entire stakes heading into Q4. Interestingly, Greg Poole’s Echo Street Capital Management dropped the biggest investment of the 750 funds watched by Insider Monkey, worth about $8.6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $5.8 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 8 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Phreesia, Inc. (NYSE:PHR). We will take a look at Five Point Holdings, LLC (NYSE:FPH), Gol Linhas Aereas Inteligentes SA (NYSE:GOL), Avaya Holdings Corp. (NYSE:AVYA), and Krystal Biotech, Inc. (NASDAQ:KRYS). This group of stocks’ market caps match PHR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FPH | 13 | 174951 | -2 |
| GOL | 11 | 39509 | -1 |
| AVYA | 27 | 142047 | -12 |
| KRYS | 9 | 188739 | 0 |
| Average | 15 | 136312 | -3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $52 million in PHR’s case. Avaya Holdings Corp. (NYSE:AVYA) is the most popular stock in this table. On the other hand Krystal Biotech, Inc. (NASDAQ:KRYS) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Phreesia, Inc. (NYSE:PHR) is even less popular than KRYS. Hedge funds clearly dropped the ball on PHR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on PHR as the stock returned 38% so far in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
