Acadia Healthcare Company Inc (NASDAQ:ACHC): Are Hedge Funds Right About This Stock?

Is Acadia Healthcare Company Inc (NASDAQ:ACHC) ready to raly soon? Hedge funds are getting more optimistic. The number of long hedge fund positions advanced by 10 recently.

Acadia Healthcare Company Inc (NASDAQ:ACHC)

In the eyes of most shareholders, hedge funds are viewed as unimportant, outdated investment tools of yesteryear. While there are greater than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the top tier of this club, close to 450 funds. It is widely believed that this group oversees the lion's share of all hedge funds' total capital, and by paying attention to their best stock picks, we have deciphered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as beneficial, positive insider trading activity is a second way to parse down the stock market universe. There are many incentives for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this strategy if you understand where to look (learn more here).

Keeping this in mind, it's important to take a look at the latest action surrounding Acadia Healthcare Company Inc (NASDAQ:ACHC).

What have hedge funds been doing with Acadia Healthcare Company Inc (NASDAQ:ACHC)?

In preparation for this year, a total of 17 of the hedge funds we track were long in this stock, a change of 143% from the third quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, James Dondero's Highland Capital Management had the biggest position in Acadia Healthcare Company Inc (NASDAQ:ACHC), worth close to $12 million, comprising 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Brian Taylor of Pine River Capital Management, with a $9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers that are bullish include Brian Ashford-Russell and Tim Woolley's Polar Capital, Phill Gross and Robert Atchinson's Adage Capital Management and Richard Driehaus's Driehaus Capital.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Pine River Capital Management, managed by Brian Taylor, initiated the largest position in Acadia Healthcare Company Inc (NASDAQ:ACHC). Pine River Capital Management had 9 million invested in the company at the end of the quarter. SAC Subsidiary's CR Intrinsic Investors also made a $5 million investment in the stock during the quarter. The other investors with new positions in the stock are Anand Parekh's Alyeska Investment Group, Drew Cupps's Cupps Capital Management, and Xerion.

How have insiders been trading Acadia Healthcare Company Inc (NASDAQ:ACHC)?

Bullish insider trading is most useful when the company we're looking at has seen transactions within the past 180 days. Over the last six-month time period, Acadia Healthcare Company Inc (NASDAQ:ACHC) has seen 1 unique insiders purchasing, and 16 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned time-tested strategies, retail investors should always watch hedge fund and insider trading activity, and Acadia Healthcare Company Inc (NASDAQ:ACHC) shareholders fit into this picture quite nicely.

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Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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