Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) shares have rallied over 10% today following a forecast by the company that it will have better-than-expected results for its second quarter earnings, which are scheduled to be reported on August 4. The information technology and services firm, which caters mostly to the healthcare sector, said that it expects to report adjusted earnings of $0.12 per share, up from $0.09 per share in the year-ago period, on revenues of $350 million to $353 million, compared to its $351 million in revenues in the second quarter of last year. GAAP loss per share is expected by the company to be about $0.01 per share, down from a loss per share of $0.09 in the comparable year-ago quarter. Wall Street is expecting the firm to report earnings of $0.10 per share on revenues of $347 million. Meanwhile, for the second quarter, Allscripts also revealed that it expects to report bookings in the $255 million to $260 million range, a record for the second quarter, and a growth of between 9% and 12 year-over-year.
Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) President and Chief Executive Officer Paul M. Black explained in a statement that, “Sales growth in the second quarter accelerated compared with the first quarter based on improving performance within acute and international markets. Ambulatory solutions and growth in Allscripts payer and life sciences business helped drive the year-over-year bookings growth. Revenue improved on a sequential basis, driven by growth in both recurring and non-recurring revenue.”
Heading into the second quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), up from 24 one quarter earlier. However, the total value of the holdings of those funds which held long positions by the end of the first quarter decreased by 11.55% compared to the previous quarter, to $471.34 million. This was slightly offset, nonetheless, by a 6.34% decline in the stock’s value from January 2 to March 31. The stock grew by 14.38% in the second quarter.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 139% and beating the market by more than 80 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Insider Monkey also looks at insider trades, be they sales or purchases, to gauge insider sentiment on their own firms’ stocks. However, Allscripts Healthcare Solutions insiders have not made any purchases or sales so far this year.
Bearing all of these in mind, let’s view the new hedge fund activity concerning Allscripts Healthcare Solutions Inc.
What have hedge funds been doing with Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)?
When looking at the hedgies followed by Insider Monkey, Clifton S. Robbins‘ Blue Harbour Group had the number one position in Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) on March 31, owning 14.42 million shares worth close to $172.5 million, corresponding to 5.2% of its total 13F portfolio. On Blue Harbour Group’s heels is Glenhill Advisors, led by Glenn J. Krevlin, holding a $69.6 million position in 5.82 million shares; 5.5% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish encompass Ken Griffin’s Citadel Investment Group, Jacob Gottlieb’s Visium Asset Management, and Israel Englander’s Millennium Management.
Leading the pack of bullish hedge funds on Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) is Point72 Asset Management, led by Steve Cohen, who established the most outsized position in Allscripts during the first quarter, buying 1.18 million shares worth $14.1 million. On the other side of the fence, Eminence Capital led by Ricky Sandler sold all of its 10.79 million shares worth $137.79 million.
Given that the smart money has thus far been wrong on Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) we can recommend buying it on its improved results and outlook, despite funds’ bearish first quarter sentiment.
Disclosure: None
