Should You Avoid Merge Healthcare Inc. (MRGE)?

Merge Healthcare Inc. (NASDAQ:MRGE) has experienced a decrease in enthusiasm from smart money of late.

In today’s marketplace, there are many metrics shareholders can use to monitor Mr. Market. Some of the most innovative are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can beat their index-focused peers by a significant margin (see just how much).

Merge Healthcare Inc. (NASDAQ:MRGE)

Just as important, optimistic insider trading activity is another way to break down the world of equities. As the old adage goes: there are a variety of stimuli for a bullish insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know where to look (learn more here).

Keeping this in mind, it’s important to take a glance at the recent action regarding Merge Healthcare Inc. (NASDAQ:MRGE).

What have hedge funds been doing with Merge Healthcare Inc. (NASDAQ:MRGE)?

At the end of the first quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of -8% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially.

According to our comprehensive database, Deerfield Management, managed by James E. Flynn, holds the biggest position in Merge Healthcare Inc. (NASDAQ:MRGE). Deerfield Management has a $2 million position in the stock, comprising 0.1% of its 13F portfolio. On Deerfield Management’s heels is Visium Asset Management, managed by Jacob Gottlieb, which held a $1.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Glenn Russell Dubin’s Highbridge Capital Management, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.

Since Merge Healthcare Inc. (NASDAQ:MRGE) has witnessed falling interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who sold off their entire stakes in Q1. Intriguingly, Carl Tiedemann and Michael Tiedemann’s TIG Advisors sold off the biggest investment of all the hedgies we monitor, worth about $5.6 million in stock., and SAC Subsidiary of CR Intrinsic Investors was right behind this move, as the fund sold off about $1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in Q1.

How have insiders been trading Merge Healthcare Inc. (NASDAQ:MRGE)?

Insider purchases made by high-level executives is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last 180-day time frame, Merge Healthcare Inc. (NASDAQ:MRGE) 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 Merge Healthcare Inc. (NASDAQ:MRGE). These stocks are WebMD Health Corp. (NASDAQ:WBMD), MedAssets, Inc. (NASDAQ:MDAS), Quality Systems, Inc. (NASDAQ:QSII), Streamline Health Solutions Inc. (NASDAQ:STRM), and Computer Programs & Systems, Inc. (NASDAQ:CPSI). All of these stocks are in the healthcare information services industry and their market caps are similar to MRGE’s market cap.