Is The Market Overreacting As Magellan Health Services Inc (MGLN) Sinks?

Hedge fund activity in Magellan Health Services Inc (NASDAQ:MGLN)

When looking at the hedgies followed by Insider Monkey, Samuel Isaly‘s OrbiMed Advisors had the most valuable position in Magellan Health Services Inc (NASDAQ:MGLN), worth close to $100.2 million, amounting to 0.9% of its total 13F portfolio. The second-largest stake was held by Renaissance Technologies, led by Jim Simons, holding a $73.7 million position; the fund had 0.2% of its 13F portfolio invested in the stock. Other hedgies that held long positions contain Conan Laughlin’s North Tide Capital, and Robert Rodriguez and Steven Romick‘s First Pacific Advisors LLC.

First Pacific Advisors also had the largest new position in the stock, while Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital opened a new position of just over 150,000 shares. Peter Muller’s PDT Partners, and Glenn Russell Dubin’s Highbridge Capital were among the other prominent investors to open new Magellan positions in the quarter.

Given the wealth of activity that occurred following the most recent hedge fund ownership data, it’s hard to get a feel for what the smart money really feels about the company in its present form. They were relatively bullish in the first quarter, but acquisitions and poor results quickly followed, though the stock didn’t perform all that badly in the next quarter. Nonetheless, we believe the reaction today is overly pessimistic, and that the synergies created by the recent acquisitions will lead to improved results in the second half of the year. We recommend a buy of Magellan today on its weakness.

Disclosure: None