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Did Hedge Funds Drop The Ball On Amedisys Inc (AMED)?

Nina Todic

Is Amedisys Inc (NASDAQ:AMED) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Amedisys Inc (NASDAQ:AMED) has experienced a decrease in activity from the world's largest hedge funds of late. Our calculations also showed that AMED isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the eyes of most market participants, hedge funds are viewed as worthless, outdated financial vehicles of yesteryear. While there are over 8000 funds with their doors open at present, Our researchers hone in on the top tier of this club, about 750 funds. These money managers have their hands on the majority of all hedge funds' total asset base, and by paying attention to their best investments, Insider Monkey has brought to light various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman of GLG Partners[/caption]

Noam Gottesman GLG Partners

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a look at the latest hedge fund action encompassing Amedisys Inc (NASDAQ:AMED).

Hedge fund activity in Amedisys Inc (NASDAQ:AMED)

Heading into the fourth quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in AMED a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, D E Shaw was the largest shareholder of Amedisys Inc (NASDAQ:AMED), with a stake worth $57 million reported as of the end of September. Trailing D E Shaw was GLG Partners, which amassed a stake valued at $36.1 million. AQR Capital Management, Balyasny Asset Management, and Marshall Wace were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Amedisys Inc (NASDAQ:AMED), around 0.79% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.33 percent of its 13F equity portfolio to AMED.

Due to the fact that Amedisys Inc (NASDAQ:AMED) has experienced a decline in interest from the aggregate hedge fund industry, it's safe to say that there were a few money managers that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Krishen Sud's Sivik Global Healthcare cut the biggest stake of the 750 funds watched by Insider Monkey, comprising close to $2.4 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also dropped its stock, about $1.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 3 funds by the end of the third quarter.

Let's go over hedge fund activity in other stocks similar to Amedisys Inc (NASDAQ:AMED). We will take a look at Ryman Hospitality Properties, Inc. (NYSE:RHP), Smartsheet Inc. (NYSE:SMAR), Equity Commonwealth (NYSE:EQC), and Copa Holdings, S.A. (NYSE:CPA). All of these stocks' market caps are similar to AMED's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RHP,20,397632,-1 SMAR,45,1213839,-1 EQC,24,179039,4 CPA,18,284351,2 Average,26.75,518715,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $519 million. That figure was $198 million in AMED's case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Copa Holdings, S.A. (NYSE:CPA) is the least popular one with only 18 bullish hedge fund positions. Amedisys Inc (NASDAQ:AMED) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on AMED as the stock returned 24.4% during the first two months of Q4 and outperformed the market by an even larger margin.

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

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