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Should You Avoid Allscripts Healthcare Solutions Inc (MDRX)?

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Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has seen a decrease in support from the world’s most elite money managers lately.

In the eyes of most shareholders, hedge funds are seen as slow, outdated investment tools of the past. While there are over 8000 funds with their doors open today, we look at the masters of this group, about 450 funds. It is widely believed that this group has its hands on the lion’s share of the smart money’s total capital, and by watching their top picks, we have discovered a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as beneficial, bullish insider trading sentiment is a second way to break down the world of equities. Just as you’d expect, there are a variety of stimuli for an insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this method if you understand what to do (learn more here).

Now, it’s important to take a look at the key action encompassing Allscripts Healthcare Solutions Inc (NASDAQ:MDRX).

What have hedge funds been doing with Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)?

Heading into Q2, a total of 27 of the hedge funds we track were long in this stock, a change of -29% from the first quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly.

Of the funds we track, Arthur B Cohen and Joseph Healey’s Healthcor Management LP had the biggest position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), worth close to $227.6 million, accounting for 9.9% of its total 13F portfolio. The second largest stake is held by Clifton S. Robbins of Blue Harbour Group, with a $80.8 million position; 8.3% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Thomas Ellis and Todd Hammer’s North Run Capital, Thomas Steyer’s Farallon Capital and Glenn Russell Dubin’s Highbridge Capital Management.

Since Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has experienced declining sentiment from the smart money, we can see that there exists a select few money managers who sold off their positions entirely in Q1. At the top of the heap, Michael Blitzer’s Kingstown Capital Management dumped the biggest position of the “upper crust” of funds we monitor, worth about $21.2 million in stock.. Jim Simons’s fund, Renaissance Technologies, also said goodbye to its stock, about $8.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 11 funds in Q1.

What have insiders been doing with Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest 180-day time frame, Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) has experienced 5 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Allscripts Healthcare Solutions Inc (NASDAQ:MDRX). These stocks are Computer Programs & Systems, Inc. (NASDAQ:CPSI), Quality Systems, Inc. (NASDAQ:QSII), MedAssets, Inc. (NASDAQ:MDAS), WebMD Health Corp. (NASDAQ:WBMD), and Medidata Solutions Inc (NASDAQ:MDSO). This group of stocks belong to the healthcare information services industry and their market caps match MDRX’s market cap.

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