Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and investors' positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Acadia Healthcare Company Inc (NASDAQ:ACHC) based on that data.
Is Acadia Healthcare Company Inc (NASDAQ:ACHC) a healthy stock for your portfolio? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets were cut by 1 lately. Our calculations also showed that ACHC isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_736153" align="aligncenter" width="473"] Didric Cederholm of Lion Point Capital[/caption]
Let's take a glance at the new hedge fund action surrounding Acadia Healthcare Company Inc (NASDAQ:ACHC).
How have hedgies been trading Acadia Healthcare Company Inc (NASDAQ:ACHC)?
Heading into the first quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in ACHC 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.
Of the funds tracked by Insider Monkey, Elliott Management, managed by Paul Singer, holds the largest position in Acadia Healthcare Company Inc (NASDAQ:ACHC). Elliott Management has a $83.6 million position in the stock, comprising 0.6% of its 13F portfolio. The second most bullish fund manager is P2 Capital Partners, managed by Claus Moller, which holds a $81.3 million position; 8.2% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Ken Griffin's Citadel Investment Group, Didric Cederholm's Lion Point and Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management.
Since Acadia Healthcare Company Inc (NASDAQ:ACHC) has experienced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there was a specific group of money managers who sold off their positions entirely heading into Q3. Interestingly, Michael Doheny's Freshford Capital Management dumped the biggest stake of all the hedgies followed by Insider Monkey, valued at close to $29.5 million in call options, and Israel Englander's Millennium Management was right behind this move, as the fund sold off about $3.5 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Acadia Healthcare Company Inc (NASDAQ:ACHC) but similarly valued. We will take a look at Monro, Inc. (NASDAQ:MNRO), Genesis Energy, L.P. (NYSE:GEL), Spectrum Brands Holdings, Inc. (NYSE:SPB), and SiteOne Landscape Supply, Inc. (NYSE:SITE). This group of stocks' market values are similar to ACHC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MNRO,18,179953,8 GEL,5,7438,3 SPB,25,576863,-1 SITE,11,38041,-4 Average,14.75,200574,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $309 million in ACHC's case. Spectrum Brands Holdings, Inc. (NYSE:SPB) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 5 bullish hedge fund positions. Acadia Healthcare Company Inc (NASDAQ:ACHC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ACHC wasn't nearly as popular as these 15 stock and hedge funds that were betting on ACHC were disappointed as the stock returned 15.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.