Is athenahealth, Inc (ATHN) Going to Burn These Hedge Funds?

What’s a smart athenahealth, Inc (NASDAQ:ATHN) investor to do?

Now, according to many of your peers, hedge funds are viewed as overrated, outdated investment tools of a period lost to current times. Although there are more than 8,000 hedge funds with their doors open currently, Insider Monkey focuses on the bigwigs of this group, close to 525 funds. It is widely held that this group controls the majority of the hedge fund industry’s total assets, and by keeping an eye on their highest quality investments, we’ve spotted a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).

Equally as useful, bullish insider trading sentiment is another way to look at the stock market universe. Just as you’d expect, there are a variety of motivations for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know what to do (learn more here).

Furthermore, let’s examine the latest info surrounding athenahealth, Inc (NASDAQ:ATHN).

What have hedge funds been doing with athenahealth, Inc (NASDAQ:ATHN)?

At the end of the second quarter, a total of 14 of the hedge funds we track were long in this stock, a change of 8% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably.

According to our 13F database, Criterion Capital, managed by Christopher Lord, holds the most valuable position in athenahealth, Inc (NASDAQ:ATHN). Criterion Capital has a $102.9 million position in the stock, comprising 4.2% of its 13F portfolio. Sitting at the No. 2 spot is Andreas Halvorsen of Viking Global, with a $60.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Ken Griffin’s Citadel Investment Group, SAC Subsidiary’s CR Intrinsic Investors and Jim Simons’s Renaissance Technologies.

Consequently, specific money managers were breaking ground themselves. Criterion Capital, managed by Christopher Lord, established the biggest position in athenahealth, Inc (NASDAQ:ATHN). Criterion Capital had 102.9 million invested in the company at the end of the quarter. Andreas Halvorsen’s Viking Global also made a $60.5 million investment in the stock during the quarter. The other funds with brand new ATHN positions are Ken Griffin’s Citadel Investment Group, SAC Subsidiary’s CR Intrinsic Investors, and Jim Simons’s Renaissance Technologies.

What have insiders been doing with athenahealth, Inc (NASDAQ:ATHN)?

Insider buying made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past 180 days. Over the last six-month time period, athenahealth, Inc (NASDAQ:ATHN) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to athenahealth, Inc (NASDAQ:ATHN). These stocks are Vantiv Inc (NYSE:VNTV), MAXIMUS, Inc. (NYSE:MMS), WEX Inc (NYSE:WXS), Global Payments Inc (NYSE:GPN), and Rollins, Inc. (NYSE:ROL). All of these stocks are in the business services industry and their market caps are similar to ATHN’s market cap.

Using the returns demonstrated by the previously mentioned strategies, regular investors must always keep one eye on hedge fund and insider trading activity, and athenahealth, Inc (NASDAQ:ATHN) applies perfectly to this mantra.

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