HealthStream, Inc. (HSTM): Are Hedge Funds Right About This Stock?

Is HealthStream, Inc. (NASDAQ:HSTM) a splendid investment today? The best stock pickers are becoming less confident. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience

In today’s marketplace, there are dozens of indicators investors can use to analyze the equity markets. Some of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can trounce the broader indices by a healthy amount (see just how much).

Just as integral, optimistic insider trading activity is another way to parse down the world of equities. Obviously, there are plenty of incentives for an insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a peek at the recent action surrounding HealthStream, Inc. (NASDAQ:HSTM).

How have hedgies been trading HealthStream, Inc. (NASDAQ:HSTM)?

In preparation for this quarter, a total of 10 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Archon Capital Management, managed by Constantinos J. Christofilis, holds the biggest position in HealthStream, Inc. (NASDAQ:HSTM). Archon Capital Management has a $14.1 million position in the stock, comprising 7.3% of its 13F portfolio. The second largest stake is held by Driehaus Capital, managed by Richard Driehaus, which held a $4.8 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Jim Simons’s Renaissance Technologies, James Dondero’s Highland Capital Management and Israel Englander’s Millennium Management.

Judging by the fact that HealthStream, Inc. (NASDAQ:HSTM) has experienced a declination in interest from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who sold off their entire stakes at the end of the first quarter. Interestingly, Robert B. Gillam’s McKinley Capital Management dropped the biggest investment of the 450+ funds we monitor, valued at close to $1.2 million in stock.. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What have insiders been doing with HealthStream, Inc. (NASDAQ:HSTM)?

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past half-year. Over the latest 180-day time period, HealthStream, Inc. (NASDAQ:HSTM) has seen zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to HealthStream, Inc. (NASDAQ:HSTM). These stocks are Bitauto Hldg Ltd (ADR) (NYSE:BITA), Web.com Group Inc (NASDAQ:WWWW), Move Inc. (NASDAQ:MOVE), SouFun Holdings Limited (ADR) (NYSE:SFUN), and Blucora Inc (NASDAQ:BCOR). This group of stocks are in the internet information providers industry and their market caps match HSTM’s market cap.