After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards GoHealth, Inc. (NASDAQ:GOCO).
Is GOCO a good stock to buy? GoHealth, Inc. (NASDAQ:GOCO) was in 17 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 18. GOCO has seen a decrease in enthusiasm from smart money of late. There were 18 hedge funds in our database with GOCO holdings at the end of December. Our calculations also showed that GOCO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Matthew Halbower of Pentwater Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing GoHealth, Inc. (NASDAQ:GOCO).
Do Hedge Funds Think GOCO Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in GOCO a year ago. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Centerbridge Partners was the largest shareholder of GoHealth, Inc. (NASDAQ:GOCO), with a stake worth $475.6 million reported as of the end of March. Trailing Centerbridge Partners was Millennium Management, which amassed a stake valued at $23.2 million. Cannell Capital, Citadel Investment Group, and Adage 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 Centerbridge Partners allocated the biggest weight to GoHealth, Inc. (NASDAQ:GOCO), around 44.21% of its 13F portfolio. Cannell Capital is also relatively very bullish on the stock, earmarking 3.03 percent of its 13F equity portfolio to GOCO.
Since GoHealth, Inc. (NASDAQ:GOCO) has faced falling interest from hedge fund managers, we can see that there were a few funds who were dropping their full holdings heading into Q2. Intriguingly, Andreas Halvorsen’s Viking Global sold off the biggest position of the 750 funds tracked by Insider Monkey, valued at close to $35.5 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $2.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to GoHealth, Inc. (NASDAQ:GOCO). We will take a look at Kinsale Capital Group, Inc. (NASDAQ:KNSL), Olo Inc. (NYSE:OLO), Safehold Inc. (NYSE:SAFE), Physicians Realty Trust (NYSE:DOC), Companhia Energetica Minas Gerais (NYSE:CIG), Commercial Metals Company (NYSE:CMC), and Hancock Whitney Corporation (NASDAQ:HWC). This group of stocks’ market caps are closest to GOCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KNSL | 17 | 49810 | 0 |
| OLO | 21 | 85960 | 21 |
| SAFE | 8 | 7714 | -1 |
| DOC | 19 | 119409 | 4 |
| CIG | 13 | 65122 | 1 |
| CMC | 20 | 134704 | -3 |
| HWC | 15 | 114698 | 0 |
| Average | 16.1 | 82488 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $550 million in GOCO’s case. Olo Inc. (NYSE:OLO) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 8 bullish hedge fund positions. GoHealth, Inc. (NASDAQ:GOCO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GOCO is 66.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately GOCO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GOCO were disappointed as the stock returned -20.4% since the end of March (through 7/23) 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 many of these stocks already outperformed the market since 2019.
Follow Gohealth Inc. (NASDAQ:GOCO)
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Disclosure: None. This article was originally published at Insider Monkey.
