Should I Avoid Amedisys Inc (AMED)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Amedisys Inc (NASDAQ:AMED) in this article.

Amedisys Inc (NASDAQ:AMED) investors should be aware of a decrease in hedge fund sentiment recently. Amedisys Inc (NASDAQ:AMED) was in 25 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. There were 26 hedge funds in our database with AMED holdings at the end of June. Our calculations also showed that AMED isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a peek at the latest hedge fund action encompassing Amedisys Inc (NASDAQ:AMED).

Paul Marshall of Marshall Wace

Do Hedge Funds Think AMED Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards AMED over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Amedisys Inc (NASDAQ:AMED) was held by D E Shaw, which reported holding $97.4 million worth of stock at the end of September. It was followed by Polar Capital with a $44.6 million position. Other investors bullish on the company included Citadel Investment Group, Redmile Group, and Millennium Management. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to Amedisys Inc (NASDAQ:AMED), around 1.64% of its 13F portfolio. Kent Lake Capital is also relatively very bullish on the stock, dishing out 0.82 percent of its 13F equity portfolio to AMED.

Because Amedisys Inc (NASDAQ:AMED) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that elected to cut their positions entirely by the end of the third quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest investment of the 750 funds monitored by Insider Monkey, worth about $13.6 million in stock, and Louis Navellier’s Navellier & Associates was right behind this move, as the fund sold off about $6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Amedisys Inc (NASDAQ:AMED). These stocks are JetBlue Airways Corporation (NASDAQ:JBLU), Herc Holdings Inc. (NYSE:HRI), The Howard Hughes Corporation (NYSE:HHC), Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS), Driven Brands Holdings Inc. (NASDAQ:DRVN), Vimeo Inc. (NASDAQ:VMEO), and Diversey Holdings, Ltd. (NASDAQ:DSEY). This group of stocks’ market values resemble AMED’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $631 million. That figure was $271 million in AMED’s case. Vimeo Inc. (NASDAQ:VMEO) is the most popular stock in this table. On the other hand Companhia de Saneamento Básico do Estado de São Paulo – SABESP (NYSE:SBS) is the least popular one with only 6 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. Our overall hedge fund sentiment score for AMED is 59.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately AMED wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AMED were disappointed as the stock returned 5.2% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.