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Do Hedge Funds and Insiders Love Five Star Quality Care, Inc. (FVE)?: The Ensign Group, Inc. (ENSG), National HealthCare Corporation (NHC)

Five Star Quality Care, Inc. (NYSE:FVE) was in 10 hedge funds’ portfolio at the end of the fourth quarter of 2012. FVE shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 8 hedge funds in our database with FVE positions at the end of the previous quarter.

Five Star Quality Care, Inc. (NYSE:FVE)

In the financial world, there are a multitude of methods market participants can use to analyze stocks. A duo of the most innovative are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the market by a solid margin (see just how much).

Equally as key, optimistic insider trading sentiment is another way to parse down the investments you’re interested in. As the old adage goes: there are a number of incentives for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the recent action encompassing Five Star Quality Care, Inc. (NYSE:FVE).

Hedge fund activity in Five Star Quality Care, Inc. (NYSE:FVE)

At year’s end, a total of 10 of the hedge funds we track were long in this stock, a change of 25% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully.

When looking at the hedgies we track, Gabe Hoffman’s Accipiter Capital Management had the most valuable position in Five Star Quality Care, Inc. (NYSE:FVE), worth close to $16 million, accounting for 13% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $4 million position; the fund has 0% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include D. E. Shaw’s D E Shaw, Robert B. Gillam’s McKinley Capital Management and Israel Englander’s Millennium Management.

With a general bullishness amongst the heavyweights, some big names have jumped into Five Star Quality Care, Inc. (NYSE:FVE) headfirst. McKinley Capital Management, managed by Robert B. Gillam, created the biggest position in Five Star Quality Care, Inc. (NYSE:FVE). McKinley Capital Management had 2 million invested in the company at the end of the quarter. Mike Vranos’s Ellington also initiated a $0 million position during the quarter.

Insider trading activity in Five Star Quality Care, Inc. (NYSE:FVE)

Insider buying is particularly usable when the company in focus has experienced transactions within the past six months. Over the latest 180-day time frame, Five Star Quality Care, Inc. (NYSE:FVE) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Five Star Quality Care, Inc. (NYSE:FVE). These stocks are The Ensign Group, Inc. (NASDAQ:ENSG), National HealthCare Corporation (NYSEAMEX:NHC), Kindred Healthcare, Inc. (NYSE:KND), Skilled Healthcare Group, Inc. (NYSE:SKH), and Assisted Living Concepts, Inc. (NYSE:ALC). All of these stocks are in the long-term care facilities industry and their market caps are similar to FVE’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
The Ensign Group, Inc. (NASDAQ:ENSG) 5 0 5
National HealthCare Corporation (NYSEAMEX:NHC) 5 0 4
Kindred Healthcare, Inc. (NYSE:KND) 11 0 8
Skilled Healthcare Group, Inc. (NYSE:SKH) 5 0 1
Assisted Living Concepts, Inc. (NYSE:ALC) 7 0 0

With the results demonstrated by our strategies, everyday investors should always keep an eye on hedge fund and insider trading activity, and Five Star Quality Care, Inc. (NYSE:FVE) is an important part of this process.

Click here to learn why you should track hedge funds