Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Progyny, Inc. (NASDAQ:PGNY).
Is PGNY stock a buy? Hedge funds were getting more bullish. The number of bullish hedge fund bets went up by 4 lately. Progyny, Inc. (NASDAQ:PGNY) was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PGNY isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Keeping this in mind let’s take a gander at the recent hedge fund action surrounding Progyny, Inc. (NASDAQ:PGNY).
Do Hedge Funds Think PGNY Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PGNY over the last 22 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of Progyny, Inc. (NASDAQ:PGNY), with a stake worth $71 million reported as of the end of December. Trailing OrbiMed Advisors was Citadel Investment Group, which amassed a stake valued at $39.9 million. Owls Nest Partners, Woodline Partners, and General Equity Partners 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 Owls Nest Partners allocated the biggest weight to Progyny, Inc. (NASDAQ:PGNY), around 14.18% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, earmarking 10.45 percent of its 13F equity portfolio to PGNY.
As aggregate interest increased, key money managers were leading the bulls’ herd. Owls Nest Partners, managed by Philip Timon, established the biggest position in Progyny, Inc. (NASDAQ:PGNY). Owls Nest Partners had $23.4 million invested in the company at the end of the quarter. Michael Rockefeller and Karl Kroeker’s Woodline Partners also made a $20.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Bhagwan Jay Rao’s Integral Health Asset Management, D. E. Shaw’s D E Shaw, and Peter Algert’s Algert Global.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Progyny, Inc. (NASDAQ:PGNY) but similarly valued. These stocks are Schneider National, Inc. (NYSE:SNDR), National Vision Holdings, Inc. (NASDAQ:EYE), Diodes Incorporated (NASDAQ:DIOD), Parsons Corporation (NYSE:PSN), Coherent, Inc. (NASDAQ:COHR), 8×8, Inc. (NASDAQ:EGHT), and Amkor Technology, Inc. (NASDAQ:AMKR). This group of stocks’ market valuations are similar to PGNY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNDR | 20 | 126481 | 5 |
| EYE | 24 | 425670 | 6 |
| DIOD | 14 | 133053 | 1 |
| PSN | 18 | 94214 | 2 |
| COHR | 22 | 207940 | -7 |
| EGHT | 26 | 1203569 | 4 |
| AMKR | 24 | 133440 | -3 |
| Average | 21.1 | 332052 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $332 million. That figure was $234 million in PGNY’s case. 8×8, Inc. (NASDAQ:EGHT) is the most popular stock in this table. On the other hand Diodes Incorporated (NASDAQ:DIOD) is the least popular one with only 14 bullish hedge fund positions. Progyny, Inc. (NASDAQ:PGNY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PGNY is 80.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on PGNY as the stock returned 16.4% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
