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Were Hedge Funds Right About Allscripts Healthcare Solutions Inc (MDRX)?

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  • MDRX

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article, we look at what those funds think of Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) based on that data.

Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) was in 23 hedge funds' portfolios at the end of June. The all time high for this statistic is 31. MDRX has experienced a decrease in activity from the world's largest hedge funds lately. There were 24 hedge funds in our database with MDRX holdings at the end of March. Our calculations also showed that MDRX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, 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. Now we're going to take a peek at the fresh hedge fund action surrounding Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).

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

At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in MDRX a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MDRX A Good Stock To Buy?
Is MDRX A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). Fisher Asset Management has a $105.4 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $82.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Renaissance Technologies and Justin John Ferayorni's Tamarack Capital Management. 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 2.36% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.58 percent of its 13F equity portfolio to MDRX.

Due to the fact that Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has experienced falling interest from the aggregate hedge fund industry, it's safe to say that there exists a select few hedge funds that decided to sell off their positions entirely last quarter. It's worth mentioning that Frank Fu's CaaS Capital cut the largest position of the "upper crust" of funds followed by Insider Monkey, worth about $15.6 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund sold off about $1.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let's now review 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 MYT Netherlands Parent B.V. (NYSE:MYTE), Cadence Bancorporation (NYSE:CADE), JELD-WEN Holding, Inc. (NYSE:JELD), First Interstate Bancsystem Inc (NASDAQ:FIBK), Mednax Inc. (NYSE:MD), Prestige Consumer Healthcare Inc. (NYSE:PBH), and Barnes Group Inc. (NYSE:B). This group of stocks' market caps are closest to MDRX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MYTE,18,139088,0 CADE,25,161340,-2 JELD,23,274466,-4 FIBK,12,24090,-2 MD,19,346888,8 PBH,13,108805,-1 B,12,42332,-6 Average,17.4,156716,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $157 million. That figure was $296 million in MDRX's case. Cadence Bancorporation (NYSE:CADE) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 12 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 68.6. 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 29.6% in 2021 through November 5th and beat the market again by 3.1 percentage points. Unfortunately MDRX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MDRX were disappointed as the stock returned -18.4% since the end of June (through 11/5) 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.