We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) based on that data.
Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) investors should pay attention to a decrease in hedge fund interest in recent months. 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 58 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the new hedge fund action regarding Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).
How are hedge funds trading Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -45% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MDRX over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the biggest position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), worth close to $37.5 million, accounting for less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $27.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain D. E. Shaw’s D E Shaw, Justin John Ferayorni’s Tamarack Capital Management and Ken Griffin’s Citadel Investment Group. 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, setting aside 0.1 percent of its 13F equity portfolio to MDRX.
Since Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers that elected to cut their positions entirely heading into Q4. It’s worth mentioning that Vishal Saluja and Pham Quang’s Endurant Capital Management dropped the biggest stake of all the hedgies followed by Insider Monkey, worth about $4.4 million in stock. Michael Johnston’s fund, Steelhead Partners, also dumped its stock, about $1.7 million worth. These transactions are interesting, as total hedge fund interest fell by 14 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) but similarly valued. We will take a look at Shutterstock Inc (NYSE:SSTK), Industrial Logistics Properties Trust (NASDAQ:ILPT), Coherus Biosciences Inc (NASDAQ:CHRS), and Dana Incorporated (NYSE:DAN). This group of stocks’ market valuations are similar to MDRX’s market valuation.
| 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 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 0.5% during the second quarter 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.
