To many of your fellow readers, hedge funds are viewed as bloated, outdated investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open currently, this site focuses on the leaders of this club, close to 525 funds. It is widely held that this group controls most of the hedge fund industry’s total assets, and by keeping an eye on their best picks, we’ve come up with a few investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Just as useful, optimistic insider trading activity is another way to analyze the investments you’re interested in. Obviously, there are a variety of stimuli for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this method if shareholders know where to look (learn more here).
Thus, we’re going to analyze the recent info for Magellan Health Services Inc (NASDAQ:MGLN).
Hedge fund activity in Magellan Health Services Inc (NASDAQ:MGLN)
At Q2’s end, a total of 15 of the hedge funds we track were long in this stock, a change of -12% from the first quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully.
When using filings from the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Magellan Health Services Inc (NASDAQ:MGLN). Royce & Associates has a $72.7 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $55.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Paul Reeder and Edward Shapiro’s PAR Capital Management, Cliff Asness’s AQR Capital Management and Ken Griffin’s Citadel Investment Group.
Since Magellan Health Services Inc (NASDAQ:MGLN) has faced declining interest from upper-tier hedge fund managers, we can see that there was a specific group of hedge funds who were dropping their entire stakes at the end of the second quarter. At the top of the heap, Glenn Russell Dubin’s Highbridge Capital Management said goodbye to the biggest stake of the “upper crust” of funds we key on, comprising an estimated $2.7 million in stock, and Mike Vranos of Ellington was right behind this move, as the fund cut about $1.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds at the end of the second quarter.
How have insiders been trading Magellan Health Services Inc (NASDAQ:MGLN)?
Insider buying is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the latest 180-day time frame, Magellan Health Services Inc (NASDAQ:MGLN) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators in other stocks similar to Magellan Health Services Inc (NASDAQ:MGLN). These stocks are WellCare Health Plans, Inc. (NYSE:WCG), Universal American Corporation (NYSE:UAM), Centene Corp (NYSE:CNC), Health Net, Inc. (NYSE:HNT), and Molina Healthcare, Inc. (NYSE:MOH). All of these stocks are in the health care plans industry and their market caps are similar to MGLN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| WellCare Health Plans, Inc. (NYSE:WCG) | 29 | 0 | 0 |
| Universal American Corporation (NYSE:UAM) | 14 | 0 | 0 |
| Centene Corp (NYSE:CNC) | 20 | 0 | 0 |
| Health Net, Inc. (NYSE:HNT) | 25 | 0 | 0 |
| Molina Healthcare, Inc. (NYSE:MOH) | 21 | 0 | 0 |
Using the results demonstrated by Insider Monkey’s strategies, average investors must always keep one eye on hedge fund and insider trading activity, and Magellan Health Services Inc (NASDAQ:MGLN) is an important part of this process.
