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Is MDRX A Good Stock To Buy According To Hedge Funds?

Asma UL Husna
·5 min read

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).

Is MDRX a good stock to buy now? Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) investors should pay attention to an increase in hedge fund sentiment lately. Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) was in 22 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 31. Our calculations also showed that MDRX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are a lot of indicators market participants can use to grade publicly traded companies. A duo of the less utilized indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outpace the market by a superb amount (see the details here).

Justin John Ferayorni - Tamarack Capital Management
Justin John Ferayorni - Tamarack Capital Management

Justin John Ferayorni of Tamarack Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's take a look at the key hedge fund action regarding Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).

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

At Q3's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MDRX over the last 21 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), with a stake worth $50.4 million reported as of the end of September. Trailing Fisher Asset Management was Arrowstreet Capital, which amassed a stake valued at $31.3 million. D E Shaw, Tamarack Capital Management, and GLG Partners 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 Tamarack Capital Management allocated the biggest weight to Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), around 4.77% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to MDRX.

As one would reasonably expect, key money managers have jumped into Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) headfirst. Millennium Management, managed by Israel Englander, assembled the most outsized position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). Millennium Management had $0.6 million invested in the company at the end of the quarter. Hoon Kim's Quantinno Capital also initiated a $0.4 million position during the quarter. The other funds with brand new MDRX positions are Donald Sussman's Paloma Partners, Peter Muller's PDT Partners, and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) but similarly valued. These stocks are Silicon Motion Technology Corp. (NASDAQ:SIMO), Hercules Capital Inc (NYSE:HTGC), NIC Inc. (NASDAQ:EGOV), Itau CorpBanca (NYSE:ITCB), Colony Capital Inc (NYSE:CLNY), M/I Homes Inc (NYSE:MHO), and Livent Corporation (NYSE:LTHM). This group of stocks' market valuations resemble MDRX's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SIMO,15,216253,-2 HTGC,13,42715,-2 EGOV,14,95062,-2 ITCB,1,1163,0 CLNY,24,188771,8 MHO,18,115813,3 LTHM,20,61214,1 Average,15,102999,0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $129 million in MDRX's case. Colony Capital Inc (NYSE:CLNY) is the most popular stock in this table. On the other hand Itau CorpBanca (NYSE:ITCB) is the least popular one with only 1 bullish hedge fund positions. Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MDRX is 76.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on MDRX as the stock returned 70% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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