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Here is What Hedge Funds Think About Amedisys Inc (AMED)

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  • AMED
  • TV

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Amedisys Inc (NASDAQ:AMED).

Hedge fund interest in Amedisys Inc (NASDAQ:AMED) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AMED isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare AMED to other stocks including Grupo Televisa SAB (NYSE:TV), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), and Hyatt Hotels Corporation (NYSE:H) to get a better sense of its popularity.

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 79 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.

John Overdeck of Two Sigma
John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks 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. Keeping this in mind let's take a look at the latest hedge fund action regarding Amedisys Inc (NASDAQ:AMED).

Do Hedge Funds Think AMED Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AMED over the last 24 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Is AMED A Good Stock To Buy?
Is AMED A Good Stock To Buy?

Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Amedisys Inc (NASDAQ:AMED). D E Shaw has a $93.2 million position in the stock, comprising 0.1% of its 13F portfolio. On D E Shaw's heels is Redmile Group, led by Jeremy Green, holding a $32.4 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass John Overdeck and David Siegel's Two Sigma Advisors, Israel Englander's Millennium Management and Brian Ashford-Russell and Tim Woolley's Polar Capital. In terms of the portfolio weights assigned to each position Navellier & Associates allocated the biggest weight to Amedisys Inc (NASDAQ:AMED), around 0.9% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, designating 0.48 percent of its 13F equity portfolio to AMED.

Because Amedisys Inc (NASDAQ:AMED) has faced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds who were dropping their full holdings by the end of the second quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest investment of the 750 funds watched by Insider Monkey, comprising an estimated $66.5 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund sold off about $17.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's now review hedge fund activity in other stocks similar to Amedisys Inc (NASDAQ:AMED). These stocks are Grupo Televisa SAB (NYSE:TV), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), Hyatt Hotels Corporation (NYSE:H), Gold Fields Limited (NYSE:GFI), ITT Inc. (NYSE:ITT), MasTec, Inc. (NYSE:MTZ), and Lincoln Electric Holdings, Inc. (NASDAQ:LECO). All of these stocks' market caps match AMED's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TV,17,1116489,2 MLCO,29,755083,0 H,23,661481,0 GFI,17,301671,2 ITT,20,272006,2 MTZ,39,402899,3 LECO,20,294072,1 Average,23.6,543386,1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $543 million. That figure was $271 million in AMED's case. MasTec, Inc. (NYSE:MTZ) is the most popular stock in this table. On the other hand Grupo Televisa SAB (NYSE:TV) is the least popular one with only 17 bullish hedge fund positions. Amedisys Inc (NASDAQ:AMED) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMED is 49.8. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately AMED wasn't nearly as popular as these 5 stocks and hedge funds that were betting on AMED were disappointed as the stock returned -36% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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