Is Acadia Healthcare Company Inc (ACHC) Going to Burn These Hedge Funds?

In this article you are going to find out whether hedge funds think Acadia Healthcare Company Inc (NASDAQ:ACHC) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Acadia Healthcare Company Inc (NASDAQ:ACHC) a buy here? Prominent investors were turning less bullish. The number of bullish hedge fund bets were trimmed by 3 lately. Acadia Healthcare Company Inc (NASDAQ:ACHC) was in 29 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 32. Our calculations also showed that ACHC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 32 hedge funds in our database with ACHC holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s review the new hedge fund action surrounding Acadia Healthcare Company Inc (NASDAQ:ACHC).

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

Heading into the fourth quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ACHC over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Acadia Healthcare Company Inc (NASDAQ:ACHC) was held by Viking Global, which reported holding $134.1 million worth of stock at the end of September. It was followed by P2 Capital Partners with a $124 million position. Other investors bullish on the company included Polar Capital, Rock Springs Capital Management, and Arrowstreet Capital. 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 10.45% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, dishing out 4.68 percent of its 13F equity portfolio to ACHC.

Seeing as Acadia Healthcare Company Inc (NASDAQ:ACHC) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Anand Parekh’s Alyeska Investment Group dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $57.2 million in stock, and Gavin M. Abrams’s Abrams Bison Investments was right behind this move, as the fund dropped about $14.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to Acadia Healthcare Company Inc (NASDAQ:ACHC). These stocks are MP Materials Corp. (NYSE:MP), Allakos Inc. (NASDAQ:ALLK), Ambarella Inc (NASDAQ:AMBA), MSA Safety Incorporated (NYSE:MSA), Hilton Grand Vacations Inc. (NYSE:HGV), LG Display Co Ltd. (NYSE:LPL), and Vir Biotechnology, Inc. (NASDAQ:VIR). This group of stocks’ market caps are closest to ACHC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $634 million. That figure was $572 million in ACHC’s case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand LG Display Co Ltd. (NYSE:LPL) is the least popular one with only 9 bullish hedge fund positions. Acadia Healthcare Company Inc (NASDAQ:ACHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACHC is 64.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 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 -11.9% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.

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