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Healthways, Inc. (HWAY): Are Hedge Funds Right To Leave This Stock?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Healthways, Inc. (NASDAQ:HWAY) based on that data.

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Healthways, Inc. (NASDAQ:HWAY) has experienced a decrease in hedge fund interest lately. HWAY was in 23 hedge funds’ portfolios at the end of the third quarter of 2015. There were 26 hedge funds in our database with HWAY holdings at the end of the previous quarter. At the end of this article we will also compare HWAY to other stocks including Accuray Incorporated (NASDAQ:ARAY), Carriage Services, Inc. (NYSE:CSV), and Five Prime Therapeutics Inc (NASDAQ:FPRX) to get a better sense of its popularity.

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To the average investor there are a lot of formulas shareholders use tograde stocks. Some of the most under-the-radar formulas are hedge fund and insider trading activity. Experts at hedge fund tracking site Insider Monkey have shown that, historically, those who follow the top picks of the elite investment managers can outclass their index-focused peers by a healthy margin (see the details here).

With all of this in mind, we’re going to take a gander at the key action regarding Healthways, Inc. (NASDAQ:HWAY).

How are hedge funds trading Healthways, Inc. (NASDAQ:HWAY)?

Heading into Q4, a total of 23 of the hedge funds tracked by Insider Monkey were long in this stock, which was a 12% drop from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially.

According to publicly available hedge fund holdings data compiled by Insider Monkey, North Tide Capital, managed by Conan Laughlin, holds the most valuable position in Healthways, Inc. (NASDAQ:HWAY). North Tide Capital has a $42.8 million position in the stock, comprising 3.7% of its 13F portfolio. On North Tide Capital’s heels is Stelliam Investment Management, managed by Ross Margolies, which holds a $35.9 million position; 0.9% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish contain James E. Flynn’s Deerfield Management, Charles Clough’s Clough Capital Partners, and Steven Boyd’s Armistice Capital.

Seeing as Healthways, Inc. (NASDAQ:HWAY) has faced falling interest from the aggregate hedge fund industry, logic holds that there exists a select few hedge funds that elected to cut their full holdings heading into Q4. Intriguingly, Mitchell Blutt’s Consonance Capital Management dropped the largest stake of the 700 funds monitored by Insider Monkey, valued at about $12.1 million in stock, and Brian Taylor of Pine River Capital Management was right behind this move, as the fund said goodbye to about $8.8 million worth of shares. These moves are interesting, as total hedge fund interest dropped by three funds heading into Q4.

Let’s also take a look at hedge fund activity in other stocks similar to Healthways, Inc. (NASDAQ:HWAY). We will take a look at Accuray Incorporated (NASDAQ:ARAY), Carriage Services, Inc. (NYSE:CSV), Five Prime Therapeutics Inc (NASDAQ:FPRX), and TravelCenters of America LLC (NYSEAMEX:TA). This group of stocks’ market caps are similar to HWAY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARAY 20 94116 1
CSV 11 25973 -2
FPRX 20 119550 3
TA 16 44852 1

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $71 million, less than half of the $158 million invested in Healthways. Accuray Incorporated (NASDAQ:ARAY) is the most popular stock in this table. On the other hand Carriage Services, Inc. (NYSE:CSV) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Healthways, Inc. (NASDAQ:HWAY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its similar-sized peers, owning 39.70% of its shares, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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