As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Acadia Healthcare Company Inc (NASDAQ:ACHC).
Acadia Healthcare Company Inc (NASDAQ:ACHC) was in 30 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ACHC has experienced an increase in activity from the world’s largest hedge funds recently. There were 29 hedge funds in our database with ACHC holdings at the end of December. Our calculations also showed that ACHC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kris Jenner of Rock Springs Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s analyze the recent hedge fund action encompassing Acadia Healthcare Company Inc (NASDAQ:ACHC).
Do Hedge Funds Think ACHC Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in ACHC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, P2 Capital Partners was the largest shareholder of Acadia Healthcare Company Inc (NASDAQ:ACHC), with a stake worth $144.5 million reported as of the end of March. Trailing P2 Capital Partners was Viking Global, which amassed a stake valued at $94.4 million. Polar Capital, Rock Springs Capital Management, and Abrams Bison Investments 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 P2 Capital Partners allocated the biggest weight to Acadia Healthcare Company Inc (NASDAQ:ACHC), around 9.59% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, earmarking 5.63 percent of its 13F equity portfolio to ACHC.
Now, some big names have been driving this bullishness. Clough Capital Partners, managed by Charles Clough, assembled the biggest position in Acadia Healthcare Company Inc (NASDAQ:ACHC). Clough Capital Partners had $21.2 million invested in the company at the end of the quarter. David Brown’s Hawk Ridge Management also initiated a $6.4 million position during the quarter. The other funds with brand new ACHC positions are Brad Farber’s Atika Capital, Michael O’Keefe’s 12th Street Asset Management, and Joel Greenblatt’s Gotham Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Acadia Healthcare Company Inc (NASDAQ:ACHC) but similarly valued. These stocks are Atea Pharmaceuticals, Inc. (NASDAQ:AVIR), Vontier Corporation (NYSE:VNT), Park Hotels & Resorts Inc. (NYSE:PK), CIT Group Inc. (NYSE:CIT), Galapagos NV (NASDAQ:GLPG), Avis Budget Group Inc. (NASDAQ:CAR), and ASGN Incorporated (NYSE:ASGN). This group of stocks’ market values resemble ACHC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AVIR | 13 | 1296595 | -1 |
| VNT | 38 | 786836 | 2 |
| PK | 18 | 101472 | 5 |
| CIT | 28 | 802021 | -3 |
| GLPG | 20 | 167561 | 8 |
| CAR | 21 | 1724243 | -7 |
| ASGN | 20 | 78754 | 6 |
| Average | 22.6 | 708212 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $708 million. That figure was $525 million in ACHC’s case. Vontier Corporation (NYSE:VNT) is the most popular stock in this table. On the other hand Atea Pharmaceuticals, Inc. (NASDAQ:AVIR) is the least popular one with only 13 bullish hedge fund positions. Acadia Healthcare Company Inc (NASDAQ:ACHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACHC is 70. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on ACHC, though not to the same extent, as the stock returned 11% since Q1 (through July 2nd) and outperformed the market as well.
Follow Acadia Healthcare Company Inc. (NASDAQ:ACHC)
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Disclosure: None. This article was originally published at Insider Monkey.
