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Despite Slightly Disappointing Hospice Results, is Amedisys (AMED) Still A Smart Choice?

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Carillon Tower Advisers, an investment management firm, published its “Carillon Eagle Mid Cap Growth Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. The Russell Midcap® Growth Index (down 0.76%) marginally outperformed its Russell Midcap® Value Index (down 1.01%) counterpart. Individual sectors across the Russell Midcap Growth were largely mixed, with financials (up 6.83%), real estate (up 4.05%), and information technology (up 2.15%) leading the way. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Carillon Tower Advisers, in its Q3 2021 investor letter, mentioned Amedisys, Inc. (NASDAQ: AMED) and discussed its stance on the firm. Amedisys, Inc. is a Baton Rouge, Louisiana-based home health care services company with a $5.8 billion market capitalization. AMED delivered a -38.55% return since the beginning of the year, while its 12-month returns are down by -26.48%. The stock closed at $180.24 per share on November 5, 2021.

Here is what Carillon Tower Advisers has to say about Amedisys, Inc. in its Q3 2021 investor letter:

"Amedisys is a leading healthcare at home company delivering personalized home health, hospice and personal care. After posting solid results throughout 2020 in both its home health and hospice businesses, the company reported slightly disappointing hospice results, driven largely in part by an elevated level of turnover experienced amongst its sales representatives. Management attributed a portion of this turnover to COVID burnout and a reluctance to begin transitioning to in-person sales visits. In addition, the company announced that its recent acquisition of Contessa Health would not contribute to profitability until 2023, which is a bit later than originally expected."

17 Countries With Universal Health Care in 2017
17 Countries With Universal Health Care in 2017

GagliardiImages/Shutterstock.com

Based on our calculations, Amedisys, Inc. (NASDAQ: AMED) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. AMED was in 26 hedge fund portfolios at the end of the first half of 2021, compared to 26 funds in the previous quarter. Amedisys, Inc. (NASDAQ: AMED) delivered a -9.95% return in the past 3 months.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Lithium prices have more than doubled over the past year, so we are checking out this emerging lithium stock. We go through lists like the 10 best growth stocks to buy 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. 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 homepage.

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