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Almost Family Inc (AFAM): North Tide Picks up Stake a Month after Proposing Merger with Amedisys Inc (AMED)

Conan Laughlin‘s North Tide Capital has inched up its position in Almost Family Inc (NASDAQ:AFAM), a new filing with the Securitie and Exchange Commission showed. After the acquisition of 97,300 shares, the fund holds a total of around 1.19 million shares of the company. Moreover, as an amended 13D filing showed, the activist stake represents 12.5% of Almost Family’s Common Stock.

Almost Family, Inc. (NASDAQ:AFAM)

North Tide Capital is a healthcare-focused hedge fund that was founded in 2010 and currently manages an equity portfolio valued at $1.31 billion. The fund uses long/short strategy to invest in public equity markets, but it also invests in value stocks to build its portfolios. As of the end of September, the largest equity position in North Tide’s equity portfolio is represented by Select Medical Holdings Corporation (NYSE:SEM), of which the fund owns 13.95 million shares, while the stock gained 27% over the last year. It is followed by Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA), represented in the equity portfolio by a stake that contains 2.00 million shares; the stock gained 39% over the last year.

Almost Family Inc (NASDAQ:AFAM) has been a long-term investment of Mr. Laughlin’s fund. In fact, the fund reported ownership of 200,000 shares of the company in its first 13F filing, for the fourth quarter of 2012. Meanwhile, as the investor has been accumulating more shares in its holding, the stock appreciated by 50% since the end of 2012. In addition, at the beginning of December, North Tide took the next step regarding its investment and issued a letter that had been sent to the board of directors of another company, Amedisys Inc (NASDAQ:AMED), in which Mr. Laughlin suggested that Amedisys Inc (NASDAQ:AMED) should merge with Almost Family Inc (NASDAQ:AFAM). The fund is also a shareholder of Amedisys, holding 4.0 million shares, which represent around 12% of the company.

North Tide stated that a merger would provide value creation opportunities for both companies, and would help Amedisys to solve its corporate overhead ineffieciences. The investor also suggested that the CEO of Almost Family Inc (NASDAQ:AFAM) William Yarmuth, could’ve filled the position as the CEO of Amedisys Inc (NASDAQ:AMED), since the company was looking for a candidate at that time. However, a couple of weeks after North Tide issued its letter, Amedisys announced that it has appointed Paul B. Kusserow as President and CEO of Amedisys.

Almost Family Inc (NASDAQ:AFAM) is a $273 million healthcare company that is engaged in providing home health services. The company managed to improve its financial results by a significant margin during the last year, as its revenue for the first nine months went up to $368.71 million, from $260.33 million a year ago. Morever, its net revenue went up to $0.97 per share, from $0.86 per share for the first nine months of 2013.

However, analysts are not very optimistic about the company’s prospects as the stock of Almost Family Inc (NASDAQ:AFAM) has a consensus ‘Hold’ rating and an average price target of $28.60. So far this year, Zacks has downgraded the stock to ‘Neutral’ from ‘Outperform’, while keeping the price target at $32.90.

Nevertheless, the last round of 13F filings has shown that some investors are bullish on Almost Family Inc (NASDAQ:AFAM). While North Tide is the largest shareholder among the fund that we track, Kevin Kotler‘s Broadfin Capital has initiated a stake during the third quarter that contains 224,20o shares. It is followed by David E. Shaw‘s D E Shaw which inched up its position by 4% on the quarter to 141,700 shares. However, while North Tide’s stake amasses more than 2% of its equity portfolio, the positions held by other funds represent overall less than 1% of their total equity portfolios.

Disclosure: none

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