Is HEALTHSOUTH Corp. (HLS) A Good Stock To Buy?

Since HEALTHSOUTH Corp. (NYSE:HLS) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies who sold off their positions entirely by the end of the third quarter. Intriguingly, John Osterweis’s Osterweis Capital Management said goodbye to the largest investment of the “upper crust” of funds monitored by Insider Monkey, totaling about $54.8 million in call options., and Mark Kingdon’s Kingdon Capital was right behind this move, as the fund dumped about $4.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds by the end of the third quarter.

Let’s check out hedge fund activity in other stocks similar to HEALTHSOUTH Corp. (NYSE:HLS). These stocks are DealerTrack Technologies Inc (NASDAQ:TRAK), Trinity Industries, Inc. (NYSE:TRN), Intrexon Corp (NYSE:XON), and NuStar Energy L.P. (NYSE:NS). This group of stocks’ market valuations resemble HLS’s market valuation.

As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $471 million in HLS’s case. DealerTrack Technologies Inc (NASDAQ:TRAK) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 11 bullish hedge fund positions. HEALTHSOUTH Corp. (NYSE:HLS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TRAK might be a better candidate to consider a long position.