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LHC Group, Inc. (LHCG): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

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LHC Group, Inc. (NASDAQ:LHCG) was in 8 hedge funds’ portfolio at the end of December. LHCG shareholders have witnessed a decrease in support from the world’s most elite money managers recently. There were 11 hedge funds in our database with LHCG positions at the end of the previous quarter.

LHC Group, Inc. (NASDAQ:LHCG)

If you’d ask most shareholders, hedge funds are seen as underperforming, outdated financial tools of the past. While there are greater than 8000 funds trading at present, we at Insider Monkey hone in on the elite of this club, close to 450 funds. It is estimated that this group oversees the majority of the smart money’s total asset base, and by watching their best investments, we have deciphered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 24 percentage points in 7 months (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is another way to parse down the world of equities. There are a variety of reasons for an executive to cut shares of his or her company, but just one, very simple reason why they would buy. Many academic studies have demonstrated the impressive potential of this strategy if shareholders understand where to look (learn more here).

Consequently, let’s take a look at the latest action encompassing LHC Group, Inc. (NASDAQ:LHCG).

How have hedgies been trading LHC Group, Inc. (NASDAQ:LHCG)?

Heading into 2013, a total of 8 of the hedge funds we track were bullish in this stock, a change of -27% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably.

According to our comprehensive database, Coliseum Capital, managed by Christopher Shackelton and Adam Gray, holds the biggest position in LHC Group, Inc. (NASDAQ:LHCG). Coliseum Capital has a $51 million position in the stock, comprising 31.3% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $3.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Richard C. Patton’s Courage Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.

Because LHC Group, Inc. (NASDAQ:LHCG) has faced declining sentiment from the smart money, it’s safe to say that there is a sect of hedgies that decided to sell off their entire stakes at the end of the year. Intriguingly, Israel Englander’s Millennium Management dropped the biggest stake of the “upper crust” of funds we key on, comprising close to $1.5 million in stock., and Michael Price of MFP Investors was right behind this move, as the fund said goodbye to about $1.3 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds at the end of the year.

What do corporate executives and insiders think about LHC Group, Inc. (NASDAQ:LHCG)?

Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has experienced transactions within the past six months. Over the last six-month time frame, LHC Group, Inc. (NASDAQ:LHCG) has seen 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to LHC Group, Inc. (NASDAQ:LHCG). These stocks are Chemed Corporation (NYSE:CHE), Addus Homecare Corporation (NASDAQ:ADUS), Almost Family, Inc. (NASDAQ:AFAM), Gentiva Health Services, Inc. (NASDAQ:GTIV), and Amedisys Inc (NASDAQ:AMED). This group of stocks belong to the home health care industry and their market caps are similar to LHCG’s market cap.

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