Here is What Hedge Funds Think About Kindred Healthcare, Inc. (KND): Assisted Living Concepts, Inc. (ALC), Five Star Quality Care, Inc. (FVE)

Kindred Healthcare, Inc. (NYSE:KND) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. KND shareholders have witnessed an increase in hedge fund sentiment of late. There were 8 hedge funds in our database with KND holdings at the end of the previous quarter.

In the 21st century investor’s toolkit, there are dozens of methods investors can use to watch publicly traded companies. Some of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top investment managers can outclass the broader indices by a healthy amount (see just how much).

Just as important, bullish insider trading sentiment is a second way to break down the stock market universe. Just as you’d expect, there are a variety of reasons for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Several academic studies have demonstrated the useful potential of this method if you know where to look (learn more here).

Keeping this in mind, we’re going to take a look at the recent action regarding Kindred Healthcare, Inc. (NYSE:KND).

Hedge fund activity in Kindred Healthcare, Inc. (NYSE:KND)

At year’s end, a total of 11 of the hedge funds we track were bullish in this stock, a change of 38% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

According to our comprehensive database, Royce & Associates, managed by Chuck Royce, holds the largest position in Kindred Healthcare, Inc. (NYSE:KND). Royce & Associates has a $8.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Royce & Associates’s heels is Wynnefield Capital, managed by Nelson Obus, which held a $5.5 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Jim Simons’s Renaissance Technologies, Israel Englander’s Millennium Management and Neil Chriss’s Hutchin Hill Capital.

As one would reasonably expect, some big names have jumped into Kindred Healthcare, Inc. (NYSE:KND) headfirst. Hutchin Hill Capital, managed by Neil Chriss, created the most valuable position in Kindred Healthcare, Inc. (NYSE:KND). Hutchin Hill Capital had 0.5 million invested in the company at the end of the quarter. Ken Gray and Steve Walsh’s Bryn Mawr Capital also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

What have insiders been doing with Kindred Healthcare, Inc. (NYSE:KND)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the last half-year time frame, Kindred Healthcare, Inc. (NYSE:KND) has seen zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Kindred Healthcare, Inc. (NYSE:KND). These stocks are Assisted Living Concepts, Inc. (NYSE:ALC), Five Star Quality Care, Inc. (NYSE:FVE), Capital Senior Living Corporation (NYSE:CSU), The Ensign Group, Inc. (NASDAQ:ENSG), and National HealthCare Corporation (NYSEAMEX:NHC). This group of stocks are the members of the long-term care facilities industry and their market caps resemble KND’s market cap.

With the returns shown by the aforementioned studies, retail investors should always monitor hedge fund and insider trading sentiment, and Kindred Healthcare, Inc. (NYSE:KND) is no exception.

Click here to learn why you should track hedge funds