Should You Avoid PharMerica Corporation (PMC)?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze PharMerica Corporation (NYSE:PMC).

Is PharMerica Corporation (NYSE:PMC) worth your attention right now? The smart money is reducing their bets on the stock. The number of bullish hedge fund bets retreated by 2 recently. At the end of this article we will also compare PMC to other stocks including Ingles Markets, Incorporated (NASDAQ:IMKTA), Isle of Capri Casinos (NASDAQ:ISLE), and Alamo Group, Inc. (NYSE:ALG) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with PharMerica Corporation (NYSE:PMC)?

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 13% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in PMC heading into this year, so hedge fund sentiment has stumbled quite a bit. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Dmitry Balyasny’s Balyasny Asset Management has the largest position in PharMerica Corporation (NYSE:PMC), worth close to $19.8 million. Coming in second is Israel Englander’s Millennium Management, with a $17.1 million position. Remaining hedge funds and institutional investors that hold long positions consist of David E. Shaw’s D E Shaw, James Dondero’s Highland Capital Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.