“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Streamline Health Solutions Inc. (NASDAQ:STRM).
Hedge fund interest in Streamline Health Solutions Inc. (NASDAQ:STRM) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Miragen Therapeutics, Inc. (NASDAQ:MGEN), Taoping Inc. (NASDAQ:TAOP), and ProPhase Labs Inc (NASDAQ:PRPH) to gather more data points. Our calculations also showed that STRM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s review the new hedge fund action regarding Streamline Health Solutions Inc. (NASDAQ:STRM).
How have hedgies been trading Streamline Health Solutions Inc. (NASDAQ:STRM)?
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in STRM over the last 17 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Justin John Ferayorni’s Tamarack Capital Management has the largest position in Streamline Health Solutions Inc. (NASDAQ:STRM), worth close to $2.3 million, corresponding to 0.6% of its total 13F portfolio. The second largest stake is held by Harbert Management, managed by Raymond J. Harbert, which holds a $2 million position; the fund has 3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Renaissance Technologies and Jeffrey Jay and David Kroin’s Great Point Partners. In terms of the portfolio weights assigned to each position Harbert Management allocated the biggest weight to Streamline Health Solutions Inc. (NASDAQ:STRM), around 2.97% of its 13F portfolio. Tamarack Capital Management is also relatively very bullish on the stock, earmarking 0.59 percent of its 13F equity portfolio to STRM.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Streamline Health Solutions Inc. (NASDAQ:STRM) but similarly valued. We will take a look at Miragen Therapeutics, Inc. (NASDAQ:MGEN), Taoping Inc. (NASDAQ:TAOP), ProPhase Labs Inc (NASDAQ:PRPH), and Amira Nature Foods Ltd (NYSE:ANFI). This group of stocks’ market valuations match STRM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGEN | 6 | 1828 | -1 |
| TAOP | 1 | 6 | 0 |
| PRPH | 1 | 370 | 0 |
| ANFI | 2 | 123 | 0 |
| Average | 2.5 | 582 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $7 million in STRM’s case. Miragen Therapeutics, Inc. (NASDAQ:MGEN) is the most popular stock in this table. On the other hand Taoping Inc. (NASDAQ:TAOP) is the least popular one with only 1 bullish hedge fund positions. Streamline Health Solutions Inc. (NASDAQ:STRM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on STRM as the stock returned 15.7% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
