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Hedge Funds Are Selling Quality Systems, Inc. (QSII)

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Quality Systems, Inc. (NASDAQ:QSII) investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months.

Quality Systems, Inc. (NASDAQ:QSII)To most stock holders, hedge funds are viewed as worthless, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at the moment, we look at the aristocrats of this club, close to 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their best investments, we have uncovered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as important, optimistic insider trading sentiment is a second way to parse down the world of equities. Obviously, there are a variety of reasons for an insider to get rid of shares of his or her company, but just one, very clear reason why they would buy. Many academic studies have demonstrated the market-beating potential of this strategy if investors know what to do (learn more here).

Now, let’s take a look at the recent action regarding Quality Systems, Inc. (NASDAQ:QSII).

Hedge fund activity in Quality Systems, Inc. (NASDAQ:QSII)

In preparation for this quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of -9% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.

Of the funds we track, SAC Subsidiary’s CR Intrinsic Investors had the largest position in Quality Systems, Inc. (NASDAQ:QSII), worth close to $18.3 million, comprising 0.6% of its total 13F portfolio. The second largest stake is held by SAC Capital Advisors, managed by Steven Cohen, which held a $10.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Israel Englander’s Millennium Management, Jacob Gottlieb’s Visium Asset Management and Ken Griffin’s Citadel Investment Group.

Judging by the fact that Quality Systems, Inc. (NASDAQ:QSII) has faced falling interest from hedge fund managers, we can see that there is a sect of money managers that decided to sell off their entire stakes last quarter. Interestingly, James Dondero’s Highland Capital Management cut the biggest investment of all the hedgies we key on, worth an estimated $1.7 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund cut about $0.6 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Insider trading activity in Quality Systems, Inc. (NASDAQ:QSII)

Insider buying is at its handiest when the company in focus has seen transactions within the past half-year. Over the last six-month time period, Quality Systems, Inc. (NASDAQ:QSII) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Quality Systems, Inc. (NASDAQ:QSII). These stocks are Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Computer Programs & Systems, Inc. (NASDAQ:CPSI), Medidata Solutions Inc (NASDAQ:MDSO), WebMD Health Corp. (NASDAQ:WBMD), and MedAssets, Inc. (NASDAQ:MDAS). This group of stocks are in the healthcare information services industry and their market caps match QSII’s market cap.

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