Hedge Funds Are Crazy About Acadia Healthcare Company Inc (ACHC)

In this article we will take a look at whether hedge funds think Acadia Healthcare Company Inc (NASDAQ:ACHC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Acadia Healthcare Company Inc (NASDAQ:ACHC) has experienced an increase in activity from the world’s largest hedge funds of late. Acadia Healthcare Company Inc (NASDAQ:ACHC) was in 32 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 30 hedge funds in our database with ACHC holdings at the end of March. Our calculations also showed that ACHC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s go over the fresh hedge fund action encompassing Acadia Healthcare Company Inc (NASDAQ:ACHC).

Do Hedge Funds Think ACHC Is A Good Stock To Buy Now?

At second quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ACHC over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

The largest stake in Acadia Healthcare Company Inc (NASDAQ:ACHC) was held by P2 Capital Partners, which reported holding $132.4 million worth of stock at the end of June. It was followed by Viking Global with a $129.3 million position. Other investors bullish on the company included Polar Capital, Alyeska Investment Group, and Rock Springs Capital Management. In terms of the portfolio weights assigned to each position P2 Capital Partners allocated the biggest weight to Acadia Healthcare Company Inc (NASDAQ:ACHC), around 9.93% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, earmarking 4.71 percent of its 13F equity portfolio to ACHC.

Now, specific money managers were breaking ground themselves. Alyeska Investment Group, managed by Anand Parekh, assembled the most valuable position in Acadia Healthcare Company Inc (NASDAQ:ACHC). Alyeska Investment Group had $57.2 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $2.2 million position during the quarter. The other funds with new positions in the stock are Mika Toikka’s AlphaCrest Capital Management, Michael Gelband’s ExodusPoint Capital, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks similar to Acadia Healthcare Company Inc (NASDAQ:ACHC). We will take a look at Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), MGM Growth Properties LLC (NYSE:MGP), eXp World Holdings, Inc. (NASDAQ:EXPI), Owl Rock Capital Corporation (NYSE:ORCC), Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC), Houlihan Lokey Inc (NYSE:HLI), and TIM S.A. (NYSE:TIMB). All of these stocks’ market caps resemble ACHC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $600 million in ACHC’s case. MGM Growth Properties LLC (NYSE:MGP) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (NYSE:PAC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Acadia Healthcare Company Inc (NASDAQ:ACHC) is more popular among hedge funds. Our overall hedge fund sentiment score for ACHC is 87. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately ACHC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ACHC were disappointed as the stock returned -9.3% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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