Acadia Healthcare Company Inc (ACHC): Are Hedge Funds Right About This Stock?

What has a smart Acadia Healthcare Company Inc (NASDAQ:ACHC) investor to do?

To many investors, hedge funds are seen as overrated, outdated financial vehicles of an era lost to time. Although there are more than 8,000 hedge funds trading currently, Insider Monkey focuses on the top tier of this group, close to 525 funds. It is widely held that this group has its hands on the majority of the smart money’s total assets, and by watching their best equity investments, we’ve discovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 outperformed the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as crucial, bullish insider trading sentiment is another way to look at the investments you’re interested in. Obviously, there are many incentives for a bullish insider to drop shares of his or her company, but just one, very simple reason why they would buy. Various academic studies have demonstrated the impressive potential of this method if you know where to look (learn more here).

Furthermore, we’re going to study the latest info for Acadia Healthcare Company Inc (NASDAQ:ACHC).

Acadia Healthcare Company Inc (NASDAQ:ACHC)

Hedge fund activity in Acadia Healthcare Company Inc (NASDAQ:ACHC)

In preparation for the third quarter, a total of 18 of the hedge funds we track were bullish in this stock, a change of 29% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully.

When using filings from the hedgies we track, James Dondero’s Highland Capital Management had the biggest position in Acadia Healthcare Company Inc (NASDAQ:ACHC), worth close to $16.1 million, accounting for 1.2% of its total 13F portfolio. Sitting at the No. 2 spot is Cupps Capital Management, managed by Drew Cupps, which held a $14.6 million position; 1.2% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Richard Driehaus’s Driehaus Capital, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.

Consequently, certain bigger names were breaking ground themselves. Highland Capital Management, managed by James Dondero, created the biggest position in Acadia Healthcare Company Inc (NASDAQ:ACHC). Highland Capital Management had 16.1 million invested in the company at the end of the quarter. Drew Cupps’s Cupps Capital Management also made a $14.6 million investment in the stock during the quarter. The other funds with brand new ACHC positions are Richard Driehaus’s Driehaus Capital, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.

Insider trading activity in Acadia Healthcare Company Inc (NASDAQ:ACHC)

Legal insider trading, particularly when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time frame, Acadia Healthcare Company Inc (NASDAQ:ACHC) 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 Acadia Healthcare Company Inc (NASDAQ:ACHC). These stocks are Healthways, Inc. (NASDAQ:HWAY), Mednax Inc. (NYSE:MD), IPC The Hospitalist Company Inc (NASDAQ:IPCM), HEALTHSOUTH Corp. (NYSE:HLS), and Hanger Inc (NYSE:HGR). This group of stocks belong to the specialized health services industry and their market caps resemble ACHC’s market cap.