Is GDRX Stock A Buy or Sell?
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 December 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 GoodRx Holdings, Inc. (NASDAQ:GDRX).
Is GDRX stock a buy? Investors who are in the know were turning less bullish. The number of bullish hedge fund bets were trimmed by 9 lately. GoodRx Holdings, Inc. (NASDAQ:GDRX) was in 32 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 41. Our calculations also showed that GDRX isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 41 hedge funds in our database with GDRX positions at the end of the third quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. With all of this in mind we're going to take a look at the new hedge fund action surrounding GoodRx Holdings, Inc. (NASDAQ:GDRX).
Do Hedge Funds Think GDRX Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards GDRX over the last 22 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Silver Lake Partners, managed by Jim Davidson, Dave Roux and Glenn Hutchins, holds the largest position in GoodRx Holdings, Inc. (NASDAQ:GDRX). Silver Lake Partners has a $122.2 million position in the stock, comprising 1.1% of its 13F portfolio. The second largest stake is held by Tiger Global Management LLC, managed by Chase Coleman, which holds a $86.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that hold long positions contain Glen Kacher's Light Street Capital, Nancy Zevenbergen's Zevenbergen Capital Investments and Pasco Alfaro and Richard Turnure's Miura Global Management. In terms of the portfolio weights assigned to each position Miura Global Management allocated the biggest weight to GoodRx Holdings, Inc. (NASDAQ:GDRX), around 7.62% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, designating 6.08 percent of its 13F equity portfolio to GDRX.
Because GoodRx Holdings, Inc. (NASDAQ:GDRX) has faced bearish sentiment from the aggregate hedge fund industry, it's safe to say that there exists a select few funds that elected to cut their positions entirely in the fourth quarter. Interestingly, Daniel Sundheim's D1 Capital Partners sold off the largest position of the 750 funds monitored by Insider Monkey, worth an estimated $38.9 million in stock. Dan Loeb's fund, Third Point, also cut its stock, about $27.8 million worth. These moves are important to note, as total hedge fund interest fell by 9 funds in the fourth quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as GoodRx Holdings, Inc. (NASDAQ:GDRX) but similarly valued. We will take a look at Korea Electric Power Corporation (NYSE:KEP), Ceridian HCM Holding Inc. (NYSE:CDAY), Cardinal Health, Inc. (NYSE:CAH), Albemarle Corporation (NYSE:ALB), Live Nation Entertainment, Inc. (NYSE:LYV), The AES Corporation (NYSE:AES), and KB Financial Group, Inc. (NYSE:KB). All of these stocks' market caps match GDRX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KEP,7,20539,2 CDAY,26,1281564,-10 CAH,49,1142309,4 ALB,21,126278,-6 LYV,46,1629672,-4 AES,38,900730,6 KB,5,42629,-1 Average,27.4,734817,-1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $735 million. That figure was $557 million in GDRX's case. Cardinal Health, Inc. (NYSE:CAH) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 5 bullish hedge fund positions. GoodRx Holdings, Inc. (NASDAQ:GDRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GDRX is 50.1. 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 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 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately GDRX wasn't nearly as popular as these 30 stocks and hedge funds that were betting on GDRX were disappointed as the stock returned 0.7% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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