Nomadic Value Partners recently released its Q2 2021 Investor Letter, a copy of which you can download here. In the second quarter, the fund posted returns of 9.6% compared to 8.6% total return for the S&P 500 Index. You should check out Nomadic Value’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the Q2 2021 Investor Letter, the fund highlighted a few stocks and 1Life Healthcare Inc (NASDAQ:ONEM) is one of them. 1Life Healthcare Inc (NASDAQ:ONEM) is a San Francisco-based chain of primary healthcare clinics. In the last three months, 1Life Healthcare Inc (NASDAQ:ONEM) stock lost 39%. Here is what the fund said:
“On June 7th One Medical (ONEM) announced an acquisition of Iora Health, a Medicare Advantage primary care business (MA PCP), for $2.1 billion of ONEM stock. The price implies a forward EV/sales valuation of 7x, a meaningful discount to comparables, Oak Street Health (OSH, portfolio holding) and Agilon Health (AGL), who had forward EV/sales multiples at time of announcement of 9x and 8.7x, respectively. However, after analyzing the provided information in combination with some additional industry scuttlebutt, I decided to sell our small position in the stock on June 18th. If you regularly read these quarterly letters, you are probably wondering why I would pass on this deal. In short, there are three reasons:
First, Iora Health is not as good of a business as the category leader, Oak Street Health (OSH, current portfolio holding), which causes me to wonder if ONEM is buying a turnaround5. Second, the deal comes with significant integration risks, both tech and cultural, and the synergies presented by management are suspect6. Third, and probably the most important, is lost time as ONEM figures out these two issues over the next 2-3 years. Category leaders are focused on patient acquisition since they have already proven attractive unit economics at some initial scale. ONEM turning inward to plug holes instead of going all-in on patient acquisition could significantly stunt the base on which revenues can compound over the next few years.”
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In Q1 2021, the number of bullish hedge fund positions on 1Life Healthcare Inc (NASDAQ:ONEM) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that 1Life Healthcare Inc (NASDAQ:ONEM) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
