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AMN Healthcare Services Inc (AMN): Hedge Funds Taking Some Chips Off The Table

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding AMN Healthcare Services Inc (NYSE:AMN) and determine whether hedge funds had an edge regarding this stock.

AMN Healthcare Services Inc (NYSE:AMN) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. AMN Healthcare Services Inc (NYSE:AMN) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 22. Our calculations also showed that AMN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let’s go over the key hedge fund action regarding AMN Healthcare Services Inc (NYSE:AMN).

What have hedge funds been doing with AMN Healthcare Services Inc (NYSE:AMN)?

At second quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards AMN over the last 20 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the number one position in AMN Healthcare Services Inc (NYSE:AMN), worth close to $22.3 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Woodline Partners, managed by Michael Rockefeller and KarláKroeker, which holds a $11.3 million position; 0.4% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism comprise Andrew Kurita’s Kettle Hill Capital Management, Renaissance Technologies and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Kettle Hill Capital Management allocated the biggest weight to AMN Healthcare Services Inc (NYSE:AMN), around 2.17% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to AMN.

Seeing as AMN Healthcare Services Inc (NYSE:AMN) has witnessed falling interest from the smart money, we can see that there were a few funds that elected to cut their full holdings last quarter. It’s worth mentioning that Mark Coe’s Intrinsic Edge Capital said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, valued at an estimated $22 million in stock. Richard Driehaus’s fund, Driehaus Capital, also dropped its stock, about $4.1 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to AMN Healthcare Services Inc (NYSE:AMN). We will take a look at Triton International Limited (NYSE:TRTN), Assured Guaranty Ltd. (NYSE:AGO), Murphy Oil Corporation (NYSE:MUR), Patterson Companies, Inc. (NASDAQ:PDCO), Associated Banc Corp (NYSE:ASB), Cronos Group Inc. (NASDAQ:CRON), and Helmerich & Payne, Inc. (NYSE:HP). This group of stocks’ market caps resemble AMN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRTN 14 44903 2
AGO 25 218746 -3
MUR 15 86330 -5
PDCO 22 126336 5
ASB 22 142871 6
CRON 14 82765 4
HP 33 187804 6
Average 20.7 127108 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $62 million in AMN’s case. Helmerich & Payne, Inc. (NYSE:HP) is the most popular stock in this table. On the other hand Triton International Limited (NYSE:TRTN) is the least popular one with only 14 bullish hedge fund positions. AMN Healthcare Services Inc (NYSE:AMN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AMN is 51.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on AMN as the stock returned 29.2% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.