Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Amedisys Inc (NASDAQ:AMED)? The smart money sentiment can provide an answer to this question.
Is Amedisys Inc (NASDAQ:AMED) a bargain? Hedge funds are taking a bullish view. The number of long hedge fund bets increased by 12 recently. Our calculations also showed that AMED isn’t among the 30 most popular stocks among hedge funds. AMED was in 32 hedge funds’ portfolios at the end of December. There were 20 hedge funds in our database with AMED holdings 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the new hedge fund action regarding Amedisys Inc (NASDAQ:AMED).
What have hedge funds been doing with Amedisys Inc (NASDAQ:AMED)?
At Q4’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 60% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMED over the last 14 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Amedisys Inc (NASDAQ:AMED), which was worth $33 million at the end of the third quarter. On the second spot was D E Shaw which amassed $32.8 million worth of shares. Moreover, Laurion Capital Management, Millennium Management, and Citadel Investment Group were also bullish on Amedisys Inc (NASDAQ:AMED), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in Amedisys Inc (NASDAQ:AMED). Marshall Wace LLP had $6.6 million invested in the company at the end of the quarter. Principal Global Investors’s Columbus Circle Investors also initiated a $5.1 million position during the quarter. The following funds were also among the new AMED investors: Paul Tudor Jones’s Tudor Investment Corp, Lee Ainslie’s Maverick Capital, and Krishen Sud’s Sivik Global Healthcare.
Let’s check out hedge fund activity in other stocks similar to Amedisys Inc (NASDAQ:AMED). These stocks are Deckers Outdoor Corp (NYSE:DECK), Synovus Financial Corp. (NYSE:SNV), Healthequity Inc (NASDAQ:HQY), and CarGurus, Inc. (NASDAQ:CARG). This group of stocks’ market values match AMED’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DECK | 21 | 398242 | -1 |
| SNV | 32 | 688626 | 0 |
| HQY | 18 | 65346 | 3 |
| CARG | 19 | 630327 | 2 |
| Average | 22.5 | 445635 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $446 million. That figure was $237 million in AMED’s case. Synovus Financial Corp. (NYSE:SNV) is the most popular stock in this table. On the other hand Healthequity Inc (NASDAQ:HQY) is the least popular one with only 18 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. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AMED wasn’t nearly as popular as these 15 stock and hedge funds that were betting on AMED were disappointed as the stock returned -2.7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
