The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Acadia Healthcare Company Inc (NASDAQ:ACHC) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Acadia Healthcare Company Inc (NASDAQ:ACHC) was in 23 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 28. ACHC has seen a decrease in support from the world’s most elite money managers of late. There were 24 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 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.
If you’d ask most stock holders, hedge funds are seen as unimportant, outdated investment tools of the past. While there are over 8000 funds in operation at present, We look at the crème de la crème of this group, about 850 funds. Most estimates calculate that this group of people orchestrate the lion’s share of the smart money’s total capital, and by paying attention to their highest performing stock picks, Insider Monkey has unsheathed many investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Didric Cederholm of Lion Point Capital
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers after its stock price crashed. 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. Now let’s take a look at the key hedge fund action regarding Acadia Healthcare Company Inc (NASDAQ:ACHC).
What have hedge funds been doing with Acadia Healthcare Company Inc (NASDAQ:ACHC)?
At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ACHC over the last 20 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, P2 Capital Partners was the largest shareholder of Acadia Healthcare Company Inc (NASDAQ:ACHC), with a stake worth $140 million reported as of the end of September. Trailing P2 Capital Partners was Abrams Bison Investments, which amassed a stake valued at $71.5 million. Lion Point, OrbiMed Advisors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. 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 11.7% of its 13F portfolio. Abrams Bison Investments is also relatively very bullish on the stock, earmarking 11.13 percent of its 13F equity portfolio to ACHC.
Judging by the fact that Acadia Healthcare Company Inc (NASDAQ:ACHC) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of hedgies that elected to cut their entire stakes in the second quarter. At the top of the heap, Clifton S. Robbins’s Blue Harbour Group dumped the biggest stake of the 750 funds followed by Insider Monkey, comprising about $18 million in stock, and Jody LaNasa’s Serengeti Asset Management was right behind this move, as the fund cut about $2.3 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Acadia Healthcare Company Inc (NASDAQ:ACHC) but similarly valued. These stocks are FormFactor, Inc. (NASDAQ:FORM), IGM Biosciences, Inc. (NASDAQ:IGMS), Bottomline Technologies (de), Inc. (NASDAQ:EPAY), TG Therapeutics Inc (NASDAQ:TGTX), Sabre Corporation (NASDAQ:SABR), NCR Corporation (NYSE:NCR), and Independent Bank Corp (NASDAQ:INDB). This group of stocks’ market values are closest to ACHC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FORM | 23 | 113808 | 1 |
| IGMS | 16 | 679671 | 2 |
| EPAY | 18 | 116704 | 0 |
| TGTX | 34 | 631710 | 8 |
| SABR | 39 | 412328 | 9 |
| NCR | 32 | 195774 | 0 |
| INDB | 7 | 10886 | 3 |
| Average | 24.1 | 308697 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $309 million. That figure was $382 million in ACHC’s case. Sabre Corporation (NASDAQ:SABR) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 7 bullish hedge fund positions. Acadia Healthcare Company Inc (NASDAQ:ACHC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ACHC is 53.6. 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 September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on ACHC as the stock returned 17.4% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
