Hedge Funds Are Buying Gentiva Health Services, Inc. (GTIV)

Gentiva Health Services, Inc. (NASDAQ:GTIV) has experienced an increase in enthusiasm from smart money of late.

If you’d ask most shareholders, hedge funds are seen as underperforming, outdated financial vehicles of the past. While there are more than 8000 funds in operation at present, we hone in on the upper echelon of this group, around 450 funds. It is widely believed that this group oversees most of all hedge funds’ total asset base, and by monitoring their top stock picks, we have deciphered a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as integral, bullish insider trading activity is a second way to parse down the marketplace. Obviously, there are a number of incentives for a corporate insider to downsize shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the valuable potential of this tactic if shareholders know where to look (learn more here).

With all of this in mind, it’s important to take a glance at the recent action encompassing Gentiva Health Services, Inc. (NASDAQ:GTIV).

What does the smart money think about Gentiva Health Services, Inc. (NASDAQ:GTIV)?

Heading into Q2, a total of 18 of the hedge funds we track held long positions in this stock, a change of 6% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly.

According to our comprehensive database, Cliff Asness’s AQR Capital Management had the most valuable position in Gentiva Health Services, Inc. (NASDAQ:GTIV), worth close to $10.8 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson of Adage Capital Management, with a $10.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism include Mario Gabelli’s GAMCO Investors, David Dreman’s Dreman Value Management and Jim Simons’s Renaissance Technologies.

Now, key money managers were leading the bulls’ herd. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the biggest position in Gentiva Health Services, Inc. (NASDAQ:GTIV). Adage Capital Management had 10.2 million invested in the company at the end of the quarter. David Dreman’s Dreman Value Management also initiated a $5.3 million position during the quarter. The other funds with brand new GTIV positions are James Dondero’s Highland Capital Management and Mark A. Nordlicht’s Platinum Management.

Insider trading activity in Gentiva Health Services, Inc. (NASDAQ:GTIV)

Insider buying is at its handiest when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time frame, Gentiva Health Services, Inc. (NASDAQ:GTIV) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Gentiva Health Services, Inc. (NASDAQ:GTIV). These stocks are Chemed Corporation (NYSE:CHE), Almost Family, Inc. (NASDAQ:AFAM), LHC Group, Inc. (NASDAQ:LHCG), and Amedisys Inc (NASDAQ:AMED). All of these stocks are in the home health care industry and their market caps resemble GTIV’s market cap.

With the results demonstrated by the aforementioned studies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Gentiva Health Services, Inc. (NASDAQ:GTIV) is no exception.

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