Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) based on that data and determine whether they were really smart about the stock.
Is Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) a buy here? The best stock pickers were turning less bullish. The number of bullish hedge fund positions were trimmed by 14 lately. Our calculations also showed that MDRX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). MDRX was in 17 hedge funds’ portfolios at the end of March. There were 31 hedge funds in our database with MDRX positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 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.
Daniel Och, Founder of OZ Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. 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. Keeping this in mind let’s take a look at the new hedge fund action encompassing Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).
Hedge fund activity in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -45% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in MDRX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), which was worth $37.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $27.2 million worth of shares. D E Shaw, Tamarack Capital Management, and Citadel Investment Group 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 Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), around 7.49% of its 13F portfolio. Manatuck Hill Partners is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to MDRX.
Since Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of hedgies who sold off their full holdings in the first quarter. Intriguingly, Vishal Saluja and Pham Quang’s Endurant Capital Management said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, valued at an estimated $4.4 million in stock, and Michael Johnston’s Steelhead Partners was right behind this move, as the fund sold off about $1.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 14 funds in the first quarter.
Let’s now review hedge fund activity in other stocks similar to Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). These stocks are Shutterstock Inc (NYSE:SSTK), Industrial Logistics Properties Trust (NASDAQ:ILPT), Coherus Biosciences Inc (NASDAQ:CHRS), and Dana Incorporated (NYSE:DAN). All of these stocks’ market caps are closest to MDRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSTK | 13 | 77238 | -2 |
| ILPT | 9 | 60718 | -4 |
| CHRS | 35 | 216871 | 3 |
| DAN | 28 | 143927 | 1 |
| Average | 21.25 | 124689 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $127 million in MDRX’s case. Coherus Biosciences Inc (NASDAQ:CHRS) is the most popular stock in this table. On the other hand Industrial Logistics Properties Trust (NASDAQ:ILPT) is the least popular one with only 9 bullish hedge fund positions. Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and surpassed the market by 17.1 percentage points. Unfortunately MDRX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MDRX investors were disappointed as the stock returned 2.3% since Q1 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
