Emeritus Corporation (NYSE:ESC) has experienced an increase in enthusiasm from smart money of late.
At the moment, there are many metrics investors can use to track Mr. Market. Two of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a healthy amount (see just how much).
Just as key, optimistic insider trading activity is a second way to parse down the investments you're interested in. Just as you'd expect, there are plenty of reasons for an upper level exec to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this strategy if "monkeys" understand where to look (learn more here).
Keeping this in mind, we're going to take a look at the key action surrounding Emeritus Corporation (NYSE:ESC).
At year's end, a total of 15 of the hedge funds we track held long positions in this stock, a change of 25% from the third quarter. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings substantially.
When looking at the hedgies we track, Richard S. Meisenberg's ACK Asset Management had the most valuable position in Emeritus Corporation (NYSE:ESC), worth close to $15 million, comprising 7.3% of its total 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $9 million position; the fund has 0% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Jim Simons's Renaissance Technologies, Israel Englander's Millennium Management and Ken Griffin's Citadel Investment Group.
As aggregate interest increased, key hedge funds have been driving this bullishness. Wexford Capital, managed by Charles Davidson, created the most valuable position in Emeritus Corporation (NYSE:ESC). Wexford Capital had 2 million invested in the company at the end of the quarter. Israel Englander's Catapult Capital Management also made a $1 million investment in the stock during the quarter. The other funds with brand new ESC positions are Andy Redleaf's Whitebox Advisors, John Overdeck and David Siegel's Two Sigma Advisors, and Anand Parekh's Alyeska Investment Group.
Bullish insider trading is at its handiest when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, Emeritus Corporation (NYSE:ESC) has experienced zero unique insiders buying, and 13 insider sales (see the details of insider trades here).
Let's also review hedge fund and insider activity in other stocks similar to Emeritus Corporation (NYSE:ESC). These stocks are Brookdale Senior Living, Inc. (NYSE:BKD), Kindred Healthcare, Inc. (NYSE:KND), National HealthCare Corporation (NYSEAMEX:NHC), The Ensign Group, Inc. (NASDAQ:ENSG), and Capital Senior Living Corporation (NYSE:CSU). All of these stocks are in the long-term care facilities industry and their market caps resemble ESC's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Brookdale Senior Living, Inc. (NYSE:BKD)||34||0||11|
|Kindred Healthcare, Inc. (NYSE:KND)||11||0||8|
|National HealthCare Corporation (NYSEAMEX:NHC)||5||0||4|
|The Ensign Group, Inc. (NASDAQ:ENSG)||5||0||5|
|Capital Senior Living Corporation (NYSE:CSU)||12||0||9|
With the returns exhibited by Insider Monkey's time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading activity, and Emeritus Corporation (NYSE:ESC) shareholders fit into this picture quite nicely.
Insider Monkey's small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.