Is Air Methods Corp (NASDAQ:AIRM) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Air Methods Corp (NASDAQ:AIRM) investors should pay attention to a decrease in enthusiasm from smart money of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as OneBeacon Insurance Group, Ltd. (NYSE:OB), Advanced Micro Devices, Inc. (NYSE:AMD), and Descartes Systems Group (USA) (NASDAQ:DSGX) to gather more data points.
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Now, let’s take a glance at the latest action surrounding Air Methods Corp (NASDAQ:AIRM).
How have hedgies been trading Air Methods Corp (NASDAQ:AIRM)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ken Grossman and Glen Schneider’s SG Capital Management has the largest position in Air Methods Corp (NASDAQ:AIRM), worth close to $27.4 million, amounting to 6.1% of its total 13F portfolio. Sitting at the No. 2 spot is Highland Capital Management, managed by James Dondero, which holds an $9.1 million call position; 0.3% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism comprise Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Mark Coe’s Coe Capital Management.
Since Air Methods Corp (NASDAQ:AIRM) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers who sold off their positions entirely in the third quarter. Intriguingly, Anand Parekh’s Alyeska Investment Group dropped the biggest position of the 700 funds tracked by Insider Monkey, comprising an estimated $21.7 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $5.2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Air Methods Corp (NASDAQ:AIRM) but similarly valued. These stocks are OneBeacon Insurance Group, Ltd. (NYSE:OB), Advanced Micro Devices, Inc. (NYSE:AMD), Descartes Systems Group (USA) (NASDAQ:DSGX), and Sarepta Therapeutics Inc (NASDAQ:SRPT). All of these stocks’ market caps resemble AIRM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OB | 12 | 11984 | 0 |
| AMD | 11 | 6470 | -4 |
| DSGX | 4 | 26054 | -1 |
| SRPT | 20 | 306659 | 6 |
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $83 million in AIRM’s case. Sarepta Therapeutics Inc (NASDAQ:SRPT) is the most popular stock in this table. On the other hand Descartes Systems Group (USA) (NASDAQ:DSGX) is the least popular one with only 4 bullish hedge fund positions. Air Methods Corp (NASDAQ:AIRM) 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. In this regard SRPT might be a better candidate to consider a long position.
