Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 30 S&P 500 stocks among hedge funds at the end of September 2018 returned an average of 6.7% through November 15th whereas the S&P 500 Index ETF gained only 2.6% during the same period. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Amedisys Inc (NASDAQ:AMED) from the perspective of those elite funds.
Is Amedisys Inc (NASDAQ:AMED) a bargain? Money managers are getting more bullish. The number of long hedge fund positions went up by 5 recently. Our calculations also showed that AMED isn’t among the 30 most popular stocks among hedge funds. AMED was in 20 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with AMED positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s take a look at the recent hedge fund action regarding Amedisys Inc (NASDAQ:AMED).
How have hedgies been trading Amedisys Inc (NASDAQ:AMED)?
Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in AMED heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Amedisys Inc (NASDAQ:AMED), which was worth $45 million at the end of the third quarter. On the second spot was GLG Partners which amassed $19.6 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and Two Sigma Advisors were also bullish on Amedisys Inc (NASDAQ:AMED), allocating a large percentage of their portfolios to this stock.
Consequently, some big names were leading the bulls’ herd. HBK Investments, managed by David Costen Haley, initiated the most outsized position in Amedisys Inc (NASDAQ:AMED). HBK Investments had $1.7 million invested in the company at the end of the quarter. Louis Navellier’s Navellier & Associates also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new AMED investors: Alec Litowitz and Ross Laser’s Magnetar Capital, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Jeffrey Talpins’s Element Capital Management.
Let’s go over hedge fund activity in other stocks similar to Amedisys Inc (NASDAQ:AMED). We will take a look at iShares MSCI All Country Asia ex Jpn ETF (NASDAQ:AAXJ), Silicon Laboratories Inc. (NASDAQ:SLAB), Blackstone Mortgage Trust Inc (NYSE:BXMT), and TriNet Group Inc (NYSE:TNET). All of these stocks’ market caps resemble AMED’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAXJ | 1 | 1786 | -2 |
| SLAB | 14 | 73412 | 1 |
| BXMT | 14 | 154926 | 4 |
| TNET | 21 | 586694 | 3 |
| Average | 12.5 | 204205 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $204 million. That figure was $140 million in AMED’s case. TriNet Group Inc (NYSE:TNET) is the most popular stock in this table. On the other hand 0 is the least popular one with only 1 bullish hedge fund positions. Amedisys Inc (NASDAQ:AMED) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TNET might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
