Here is What Hedge Funds Think About TeamHealth Holdings LLC (TMH)

Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually, their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of TeamHealth Holdings LLC (NYSE:TMH).

TeamHealth Holdings LLC (NYSE:TMH) shareholders have witnessed an increase in hedge fund sentiment recently. At the end of this article, we will also compare TeamHealth Holdings LLC (NYSE:TMH) to other stocks including Euronet Worldwide, Inc. (NASDAQ:EEFT), Synovus Financial Corp. (NYSE:SNV), and Opko Health Inc. (NYSE:OPK) to get a better sense of its popularity.

If you’d ask most investors, hedge funds are assumed to be underperforming, outdated financial tools of years past. While there are greater than 8000 funds trading at the moment, Our researchers hone in on the top tier of this group, about 700 funds. These hedge fund managers preside over bulk of all hedge funds’ total asset base, and by observing their top investments, Insider Monkey has revealed a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Now, we’re going to take a glance at the new action encompassing TeamHealth Holdings LLC (NYSE:TMH).

Hedge fund activity in TeamHealth Holdings LLC (NYSE:TMH)

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 14% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Alan Fournier’s Pennant Capital Management has the most valuable position in TeamHealth Holdings LLC (NYSE:TMH), worth close to $167.4 million, comprising 3.5% of its total 13F portfolio. The second largest stake is held by D E Shaw, which holds an $46.8 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Clifford Fox’s Columbus Circle Investors, and James Dondero’s Highland Capital Management.

As one would reasonably expect, key money managers have been driving this bullishness. Bloom Tree Partners, managed by Alok Agrawal, initiated the largest position in Team Health Holdings LLC (NYSE:TMH). Bloom Tree Partners had $32.6 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey’s Healthcor Management LP also initiated an $24.3 million position during the quarter. The other funds with brand new TeamHealth Holdings LLC (NYSE:TMH) positions are Lee Munder’s Lee Munder Capital Group, Matthew Hulsizer’s PEAK6 Capital Management, and Clint Carlson’s Carlson Capital.

Let’s now review hedge fund activity in other stocks similar to Team Health Holdings LLC (NYSE:TMH). We will take a look at Euronet Worldwide, Inc. (NASDAQ:EEFT), Synovus Financial Corp. (NYSE:SNV), Opko Health Inc. (NYSE:OPK), and ABIOMED, Inc. (NASDAQ:ABMD). This group of stocks’ market caps resembles TeamHealth Holdings LLC (NYSE:TMH)’s market cap.

As you can see, these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $299 million. That figure was $525 million in TeamHealth Holdings LLC (NYSE:TMH)’s case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand, Synovus Financial Corp. (NYSE:SNV) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks, TeamHealth Holdings LLC (NYSE:TMH) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.