Tivity Health (TVTY) Has Fallen 5% in Last One Year, Underperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Miller Value Partners top stock picks. Miller Value Partners, an investment management firm, is bullish on Tivity Health Inc. (NASDAQ:TVTY) stock. In its Opportunity Equity Q2 2019 investor letter – you can […]

If you are looking for the best ideas for your portfolio you may want to consider some of Miller Value Partners top stock picks. Miller Value Partners, an investment management firm, is bullish on Tivity Health Inc. (NASDAQ:TVTY) stock. In its Opportunity Equity Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Tivity Health Inc. (NASDAQ:TVTY) stock. Tivity Health Inc. (NASDAQ:TVTY) is a provider of health improvement, nutrition, fitness and social engagement solutions.

On July 22, 2019, Miller Value Partners had released its Opportunity Equity Q2 2019 investor letter. The investment firm said that it bought Tivity Health Inc. (NASDAQ:TVTY) stock in Q2 2019. Tivity Health Inc. (NASDAQ:TVTY) stock has posted a return of -4.5% in the trailing one year period, underperforming fund’s benchmark the S&P 500 Index which returned 15.1% in the same period. This suggests that the investment firm was wrong in its decision. On a year-to-date basis, Tivity Health Inc. (NASDAQ:TVTY) stock has fallen by 22.0%.

Miller Value Partners Opportunity Equity Fund posted a return of 1.15% in the second quarter of 2019, underperforming fund’s benchmark the S&P 500 Index which returned 4.3% in the same period. Let’s take a look at comments made by Miller Value Partners about Tivity Health Inc. (NASDAQ:TVTY) stock in the Q2 2019 investor letter.

“Tivity Health is an interesting and not well-known company. It built a business partnering with health plans and gyms to incentivize people, particularly older ones, to go to the gym, thereby improving health through both physical fitness and socialization. Late last year, the company purchased Nutrisystem, the diet food company. Prior to the deal, the combined companies had an enterprise value of $2.9B. Today, it’s down roughly 35% to $1.9B (the equity is down substantially more). It’s hard to imagine how the combination destroys $1B in value. The market hates that the company took on $1.2B in debt. But in our view, the company will be able to pay down the debt and that value should accrue to the equity. Tivity trades at $16.30 and will generate at least $3.35 per share in cash this year resulting in a free cash flow yield of 21%. There are some compelling reasons to believe the company can actually deliver on creating additional revenue opportunities from the combination (which typically isn’t the case). A small pilot program in the first quarter did just that. As debt is repaid and fundamentals play out, we think there’s a good shot this one is worth double where it’s trading now.”

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In Q1 2020, the number of bullish hedge fund positions on Tivity Health Inc. (NASDAQ:TVTY) stock decreased by about 28% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Tivity Health’s growth potential. Our calculations showed that Tivity Health Inc. (NASDAQ:TVTY) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.

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