Quality Systems, Inc. (NASDAQ:QSII) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. QSII has experienced a decrease in hedge fund sentiment lately. There were 16 hedge funds in our database with QSII positions at the end of the previous quarter.
If you’d ask most traders, hedge funds are assumed to be slow, outdated investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the top tier of this club, about 450 funds. Most estimates calculate that this group controls most of the smart money’s total asset base, and by keeping an eye on their highest performing investments, we have come up with a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).
Equally as beneficial, optimistic insider trading activity is another way to parse down the world of equities. Obviously, there are lots of incentives for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the useful potential of this tactic if “monkeys” understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the recent action surrounding Quality Systems, Inc. (NASDAQ:QSII).
Hedge fund activity in Quality Systems, Inc. (NASDAQ:QSII)
In preparation for this year, a total of 11 of the hedge funds we track were long in this stock, a change of -31% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Jacob Gottlieb’s Visium Asset Management had the most valuable position in Quality Systems, Inc. (NASDAQ:QSII), worth close to $7 million, accounting for 0.2% of its total 13F portfolio. On Visium Asset Management’s heels is Gotham Asset Management, managed by Joel Greenblatt, which held a $6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, James Dondero’s Highland Capital Management and Glenn Russell Dubin’s Highbridge Capital Management.
Since Quality Systems, Inc. (NASDAQ:QSII) has faced falling interest from the aggregate hedge fund industry, logic holds that there were a few fund managers that slashed their full holdings at the end of the year. Intriguingly, SAC Subsidiary’s Sigma Capital Management dropped the biggest investment of the 450+ funds we watch, totaling about $3 million in stock.. SAC Subsidiary’s fund, CR Intrinsic Investors, also cut its stock, about $3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 5 funds at the end of the year.
Insider trading activity in Quality Systems, Inc. (NASDAQ:QSII)
Bullish insider trading is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the last half-year time period, Quality Systems, Inc. (NASDAQ:QSII) has seen 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Quality Systems, Inc. (NASDAQ:QSII). These stocks are MedAssets, Inc. (NASDAQ:MDAS), WebMD Health Corp. (NASDAQ:WBMD), Medidata Solutions Inc (NASDAQ:MDSO), Computer Programs & Systems, Inc. (NASDAQ:CPSI), and Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). All of these stocks are in the healthcare information services industry and their market caps are similar to QSII’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|MedAssets, Inc. (NASDAQ:MDAS)||18||0||8|
|WebMD Health Corp. (NASDAQ:WBMD)||13||0||0|
|Medidata Solutions Inc (NASDAQ:MDSO)||11||0||7|
|Computer Programs & Systems, Inc. (NASDAQ:CPSI)||8||3||1|
|Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)||34||5||2|
With the returns demonstrated by the aforementioned strategies, retail investors should always pay attention to hedge fund and insider trading activity, and Quality Systems, Inc. (NASDAQ:QSII) 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.