To many of your peers, hedge funds are seen as useless, old investment vehicles of a period lost to current times. Although there are over 8,000 hedge funds in operation currently, this site aim at the moguls of this group, about 525 funds. It is widely held that this group has its hands on the majority of the smart money’s total capital, and by watching their highest quality stock picks, we’ve identified a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per 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 (find a sample of our picks).
Equally as key, optimistic insider trading sentiment is a second way to look at the investments you’re interested in. As the old adage goes: there are lots of stimuli for an executive to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this method if piggybackers understand where to look (learn more here).
Furthermore, we’re going to analyze the recent info about Merge Healthcare Inc. (NASDAQ:MRGE).
What does the smart money think about Merge Healthcare Inc. (NASDAQ:MRGE)?
At the end of the second quarter, a total of 10 of the hedge funds we track held long positions in this stock, a change of -9% from the first quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.
According to our 13F database, Deerfield Management, managed by James E. Flynn, holds the most valuable position in Merge Healthcare Inc. (NASDAQ:MRGE). Deerfield Management has a $2.5 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Visium Asset Management, managed by Jacob Gottlieb, which held a $1.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedgies that are bullish include Glenn Russell Dubin’s Highbridge Capital Management, Joel Greenblatt’s Gotham Asset Management and Richard Driehaus’s Driehaus Capital.
Since Merge Healthcare Inc. (NASDAQ:MRGE) has witnessed declining interest from the entirety of the hedge funds we track, logic holds that there were a few hedge funds who were dropping their full holdings in Q1. Interestingly, Jim Simons’s Renaissance Technologies said goodbye to the largest investment of all the hedgies we track, totaling about $0.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dropped its stock, about $0.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds in Q1.
How have insiders been trading Merge Healthcare Inc. (NASDAQ:MRGE)?
Insider buying is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest half-year time period, Merge Healthcare Inc. (NASDAQ:MRGE) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to Merge Healthcare Inc. (NASDAQ:MRGE). These stocks are WebMD Health Corp. (NASDAQ:WBMD), MedAssets, Inc. (NASDAQ:MDAS), Quality Systems, Inc. (NASDAQ:QSII), Streamline Health Solutions Inc. (NASDAQ:STRM), and Computer Programs & Systems, Inc. (NASDAQ:CPSI). This group of stocks are in the healthcare information services industry and their market caps match MRGE’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| WebMD Health Corp. (NASDAQ:WBMD) | 19 | 0 | 0 |
| MedAssets, Inc. (NASDAQ:MDAS) | 22 | 0 | 0 |
| Quality Systems, Inc. (NASDAQ:QSII) | 11 | 0 | 0 |
| Streamline Health Solutions Inc. (NASDAQ:STRM) | 3 | 0 | 0 |
| Computer Programs & Systems, Inc. (NASDAQ:CPSI) | 11 | 0 | 0 |
Using the results demonstrated by our tactics, regular investors must always watch hedge fund and insider trading sentiment, and Merge Healthcare Inc. (NASDAQ:MRGE) applies perfectly to this mantra.
