How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding AMN Healthcare Services Inc (NYSE:AMN).
Is AMN Healthcare Services Inc (NYSE:AMN) a bargain? Hedge funds were buying. The number of bullish hedge fund positions advanced by 6 in recent months. AMN Healthcare Services Inc (NYSE:AMN) was in 19 hedge funds' portfolios at the end of March. 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 Q1 rankings).
To most traders, hedge funds are seen as slow, outdated investment tools of yesteryear. While there are over 8000 funds trading at present, Our researchers choose to focus on the elite of this club, approximately 850 funds. These money managers handle bulk of all hedge funds' total asset base, and by monitoring their highest performing stock picks, Insider Monkey has brought to light several investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Michael Castor of Sio Capital
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Do Hedge Funds Think AMN Is A Good Stock To Buy Now?
At first quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 46% from the fourth quarter of 2020. On the other hand, there were a total of 22 hedge funds with a bullish position in AMN a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in AMN Healthcare Services Inc (NYSE:AMN). Millennium Management has a $39.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Driehaus Capital, managed by Richard Driehaus, which holds a $9.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism comprise Michael Castor's Sio Capital, Andrew Kurita's Kettle Hill Capital Management and Paul Tudor Jones's Tudor Investment Corp. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to AMN Healthcare Services Inc (NYSE:AMN), around 1.85% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, dishing out 1.44 percent of its 13F equity portfolio to AMN.
Consequently, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in AMN Healthcare Services Inc (NYSE:AMN). Millennium Management had $39.8 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also initiated a $9.9 million position during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, D. E. Shaw's D E Shaw, and Peter Muller's PDT Partners.
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. We will take a look at TechnipFMC plc (NYSE:FTI), Rush Street Interactive, Inc. (NYSE:RSI), LiveRamp Holdings, Inc. (NYSE:RAMP), First Majestic Silver Corp (NYSE:AG), White Mountains Insurance Group Ltd (NYSE:WTM), Intercorp Financial Services Inc. (NYSE:IFS), and Apellis Pharmaceuticals, Inc. (NASDAQ:APLS). 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 FTI,25,409812,-10 RSI,17,116342,-9 RAMP,26,300365,2 AG,15,54788,3 WTM,19,304951,3 IFS,5,35452,-1 APLS,34,696117,-1 Average,20.1,273975,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.1 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $82 million in AMN's case. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 5 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 60. 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 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on AMN as the stock returned 29.9% since the end of the first quarter (through 7/16) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.