“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).
Is Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) a worthy investment now? The best stock pickers are getting more bullish. The number of long hedge fund positions went up by 1 lately. Our calculations also showed that MDRX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MDRX was in 19 hedge funds’ portfolios at the end of the third quarter of 2019. There were 18 hedge funds in our database with MDRX holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Justin John Ferayorni of Tamarack Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the fresh hedge fund action surrounding Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).
Hedge fund activity in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in MDRX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
The largest stake in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) was held by Fisher Asset Management, which reported holding $51 million worth of stock at the end of September. It was followed by Tamarack Capital Management with a $46.4 million position. Other investors bullish on the company included D E Shaw, Arrowstreet Capital, and Millennium Management. 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 12.09% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to MDRX.
As aggregate interest increased, specific money managers were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, established the most outsized position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). PEAK6 Capital Management had $0.5 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $0.4 million position during the quarter. The other funds with brand new MDRX positions are Steve Cohen’s Point72 Asset Management, Justin John Ferayorni’s Tamarack Capital Management, and Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). These stocks are Callaway Golf Company (NYSE:ELY), Portola Pharmaceuticals Inc (NASDAQ:PTLA), Hope Bancorp, Inc. (NASDAQ:HOPE), and Dril-Quip, Inc. (NYSE:DRQ). This group of stocks’ market values are closest to MDRX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ELY | 19 | 287822 | -1 |
| PTLA | 20 | 293177 | 2 |
| HOPE | 14 | 68754 | -1 |
| DRQ | 18 | 160339 | 0 |
| Average | 17.75 | 202523 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $185 million in MDRX’s case. Portola Pharmaceuticals Inc (NASDAQ:PTLA) is the most popular stock in this table. On the other hand Hope Bancorp, Inc. (NASDAQ:HOPE) is the least popular one with only 14 bullish hedge fund positions. Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MDRX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MDRX were disappointed as the stock returned -1.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
