Should You Avoid athenahealth, Inc (ATHN)?

Is athenahealth, Inc (NASDAQ:ATHN) a safe stock to buy now? The smart money is getting less optimistic. The number of bullish hedge fund bets were trimmed by 1 recently.

To the average investor, there are plenty of indicators investors can use to track the equity markets. A pair of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the S&P 500 by a superb margin (see just how much).

Equally as beneficial, bullish insider trading sentiment is a second way to break down the financial markets. There are a number of stimuli for an insider to get rid of shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, let’s take a glance at the recent action surrounding athenahealth, Inc (NASDAQ:ATHN).

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

At the end of the first quarter, a total of 13 of the hedge funds we track held long positions in this stock, a change of -7% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly.

Of the funds we track, Christopher Lord’s Criterion Capital had the largest position in athenahealth, Inc (NASDAQ:ATHN), worth close to $118.9 million, comprising 4.4% of its total 13F portfolio. The second largest stake is held by Viking Global, managed by Andreas Halvorsen, which held a $33.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Joe DiMenna’s ZWEIG DIMENNA PARTNERS, Drew Cupps’s Cupps Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Due to the fact that athenahealth, Inc (NASDAQ:ATHN) has witnessed bearish sentiment from hedge fund managers, logic holds that there is a sect of fund managers that elected to cut their positions entirely heading into Q2. Interestingly, Robert Joseph Caruso’s Select Equity Group sold off the largest investment of all the hedgies we monitor, totaling close to $26.4 million in stock.. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $13.2 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds heading into Q2.

What do corporate executives and insiders think about athenahealth, Inc (NASDAQ:ATHN)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past six months. Over the latest 180-day time period, athenahealth, Inc (NASDAQ:ATHN) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity 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). This group of stocks are the members of the business services industry and their market caps are similar to ATHN’s market cap.

With the results demonstrated by Insider Monkey’s strategies, retail investors must always watch hedge fund and insider trading activity, and athenahealth, Inc (NASDAQ:ATHN) is an important part of this process.

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