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At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not AMN Healthcare Services Inc (NYSE:AMN) makes for a good investment right now.
Is AMN a good stock to buy now? Prominent investors were getting less bullish. The number of long hedge fund bets shrunk by 5 lately. AMN Healthcare Services Inc (NYSE:AMN) was in 16 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that AMN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 21 hedge funds in our database with AMN holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's take a gander at the recent hedge fund action encompassing AMN Healthcare Services Inc (NYSE:AMN).
Do Hedge Funds Think AMN Is A Good Stock To Buy Now?
At third quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in AMN a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in AMN Healthcare Services Inc (NYSE:AMN) was held by Citadel Investment Group, which reported holding $17 million worth of stock at the end of September. It was followed by Sio Capital with a $15.9 million position. Other investors bullish on the company included Balyasny Asset Management, Kettle Hill Capital Management, and Woodline Partners. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to AMN Healthcare Services Inc (NYSE:AMN), around 3.15% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, dishing out 2.2 percent of its 13F equity portfolio to AMN.
Judging by the fact that AMN Healthcare Services Inc (NYSE:AMN) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there exists a select few fund managers that decided to sell off their full holdings by the end of the third quarter. Intriguingly, Renaissance Technologies dropped the biggest position of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $3.8 million in stock. Chuck Royce's fund, Royce & Associates, also dumped its stock, about $2.8 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as AMN Healthcare Services Inc (NYSE:AMN) but similarly valued. These stocks are Advanced Disposal Services, Inc. (NYSE:ADSW), Spire Inc. (NYSE:SR), SPS Commerce, Inc. (NASDAQ:SPSC), Box, Inc. (NYSE:BOX), Franklin Electric Co. (NASDAQ:FELE), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), and Capri Holdings Limited (NYSE:CPRI). This group of stocks' market valuations resemble AMN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADSW,22,799197,-3 SR,20,48145,2 SPSC,14,148023,-5 BOX,41,582012,8 FELE,19,229763,4 CBRL,29,216139,7 CPRI,36,426536,8 Average,25.9,349974,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $73 million in AMN's case. Box, Inc. (NYSE:BOX) is the most popular stock in this table. On the other hand SPS Commerce, Inc. (NASDAQ:SPSC) is the least popular one with only 14 bullish hedge fund positions. AMN Healthcare Services Inc (NYSE:AMN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AMN is 25.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on AMN as the stock returned 14.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.