The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Addus Homecare Corporation (NASDAQ:ADUS).
Addus Homecare Corporation (NASDAQ:ADUS) was in 15 hedge funds' portfolios at the end of the first quarter of 2020. ADUS investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 17 hedge funds in our database with ADUS positions at the end of the previous quarter. Our calculations also showed that ADUS isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_322510" align="aligncenter" width="399"] New York Stock Exchange[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the key hedge fund action surrounding Addus Homecare Corporation (NASDAQ:ADUS).
What have hedge funds been doing with Addus Homecare Corporation (NASDAQ:ADUS)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ADUS over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cloverdale Capital Management was the largest shareholder of Addus Homecare Corporation (NASDAQ:ADUS), with a stake worth $24.3 million reported as of the end of September. Trailing Cloverdale Capital Management was Polar Capital, which amassed a stake valued at $15.8 million. Marshall Wace LLP, Armistice Capital, and Cruiser Capital Advisors 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 Cloverdale Capital Management allocated the biggest weight to Addus Homecare Corporation (NASDAQ:ADUS), around 18.97% of its 13F portfolio. Cruiser Capital Advisors is also relatively very bullish on the stock, setting aside 4.22 percent of its 13F equity portfolio to ADUS.
Because Addus Homecare Corporation (NASDAQ:ADUS) has experienced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there is a sect of funds that elected to cut their entire stakes by the end of the first quarter. It's worth mentioning that James E. Flynn's Deerfield Management dumped the largest position of the "upper crust" of funds monitored by Insider Monkey, valued at about $19.2 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund sold off about $6.8 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Addus Homecare Corporation (NASDAQ:ADUS) but similarly valued. These stocks are Alamo Group, Inc. (NYSE:ALG), ShockWave Medical, Inc. (NASDAQ:SWAV), Futu Holdings Limited (NASDAQ:FUTU), and Two Harbors Investment Corp (NYSE:TWO). This group of stocks' market caps are closest to ADUS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALG,8,132111,1 SWAV,10,70180,-5 FUTU,3,452,0 TWO,24,32472,4 Average,11.25,58804,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $65 million in ADUS's case. Two Harbors Investment Corp (NYSE:TWO) is the most popular stock in this table. On the other hand Futu Holdings Limited (NASDAQ:FUTU) is the least popular one with only 3 bullish hedge fund positions. Addus Homecare Corporation (NASDAQ:ADUS) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on ADUS as the stock returned 36.8% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.