Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Phreesia, Inc. (NYSE:PHR) in this article.
Is PHR a good stock to buy now? Investors who are in the know were taking a bullish view. The number of long hedge fund positions rose by 2 lately. Phreesia, Inc. (NYSE:PHR) was in 22 hedge funds’ portfolios at the end of September. 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 PHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 20 hedge funds in our database with PHR holdings at the end of June.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. 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 scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 look at the latest hedge fund action regarding Phreesia, Inc. (NYSE:PHR).
Do Hedge Funds Think PHR Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in PHR a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Rock Springs Capital Management was the largest shareholder of Phreesia, Inc. (NYSE:PHR), with a stake worth $25.7 million reported as of the end of September. Trailing Rock Springs Capital Management was Select Equity Group, which amassed a stake valued at $22.4 million. Citadel Investment Group, Park West Asset Management, and Driehaus Capital 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 Tamarack Capital Management allocated the biggest weight to Phreesia, Inc. (NYSE:PHR), around 2.97% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, dishing out 0.65 percent of its 13F equity portfolio to PHR.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most valuable position in Phreesia, Inc. (NYSE:PHR). Millennium Management had $4.9 million invested in the company at the end of the quarter. Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners also made a $1.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, David Harding’s Winton Capital Management, and Peter Muller’s PDT Partners.
Let’s also examine hedge fund activity in other stocks similar to Phreesia, Inc. (NYSE:PHR). We will take a look at Model N Inc (NYSE:MODN), TTM Technologies, Inc. (NASDAQ:TTMI), Luminex Corporation (NASDAQ:LMNX), COMPASS Pathways Plc (NASDAQ:CMPS), MFA Financial, Inc. (NYSE:MFA), The St. Joe Company (NYSE:JOE), and Epizyme Inc (NASDAQ:EPZM). This group of stocks’ market caps resemble PHR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MODN | 22 | 144636 | 4 |
| TTMI | 20 | 124165 | 2 |
| LMNX | 29 | 234236 | 2 |
| CMPS | 17 | 139456 | 17 |
| MFA | 18 | 38012 | 2 |
| JOE | 15 | 602036 | 4 |
| EPZM | 22 | 253304 | -1 |
| Average | 20.4 | 219406 | 4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $127 million in PHR’s case. Luminex Corporation (NASDAQ:LMNX) is the most popular stock in this table. On the other hand The St. Joe Company (NYSE:JOE) is the least popular one with only 15 bullish hedge fund positions. Phreesia, Inc. (NYSE:PHR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PHR is 62. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on PHR as the stock returned 70.8% since the end of Q3 (through 12/14) 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.
