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Is Healthways, Inc. (HWAY) Going to Burn These Hedge Funds?

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Should Healthways, Inc. (NASDAQ:HWAY) investors track the following data?

Now, according to many market players, hedge funds are seen as useless, outdated financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation in present day, this site focuses on the crème de la crème of this group, around 525 funds. It is assumed that this group has its hands on the majority of all hedge funds’ total capital, and by watching their highest performing investments, we’ve found a number of investment strategies that have historically beaten 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 began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as crucial, optimistic insider trading activity is another way to analyze the world of equities. Just as you’d expect, there are a variety of motivations for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this method if you understand where to look (learn more here).

What’s more, let’s examine the recent info for Healthways, Inc. (NASDAQ:HWAY).

What does the smart money think about Healthways, Inc. (NASDAQ:HWAY)?

In preparation for the third quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 10% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.

Healthways, Inc. (NASDAQ:HWAY)Out of the hedge funds we follow, Royce & Associates, managed by Chuck Royce, holds the largest position in Healthways, Inc. (NASDAQ:HWAY). Royce & Associates has a $14.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which held a $6.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other peers that hold long positions include Jason F. Harris’s Kendall Square Capital, Matthew Hulsizer’s PEAK6 Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

As one would understandably expect, particular hedge funds have been driving this bullishness. Royce & Associates, managed by Chuck Royce, initiated the biggest position in Healthways, Inc. (NASDAQ:HWAY). Royce & Associates had 14.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $6.2 million position during the quarter. The following funds were also among the new HWAY investors: Jason F. Harris’s Kendall Square Capital, Matthew Hulsizer’s PEAK6 Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

How have insiders been trading Healthways, Inc. (NASDAQ:HWAY)?

Legal insider trading, particularly when it’s bullish, is best served when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time period, Healthways, Inc. (NASDAQ:HWAY) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Healthways, Inc. (NASDAQ:HWAY). These stocks are Acadia Healthcare Company Inc (NASDAQ:ACHC), Hanger Inc (NYSE:HGR), IPC The Hospitalist Company Inc (NASDAQ:IPCM), The Providence Service Corporation (NASDAQ:PRSC), and U.S. Physical Therapy, Inc. (NYSE:USPH). This group of stocks are in the specialized health services industry and their market caps resemble HWAY’s market cap.

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