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Mednax Inc. (NYSE:MD): Hedge Funds and Insiders Are Bearish, What Should You Do? – Hanger Inc (NYSE:HGR), HEALTHSOUTH Corp. (NYSE:HLS)

Mednax Inc. (NYSE:MD) was in 14 hedge funds’ portfolio at the end of the fourth quarter of 2012. MD has seen a decrease in support from the world’s most elite money managers in recent months. There were 14 hedge funds in our database with MD positions at the end of the previous quarter.

Mednax Inc. (NYSE:MD)

In the financial world, there are plenty of indicators investors can use to watch publicly traded companies. A duo of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top investment managers can beat the broader indices by a superb amount (see just how much).

Just as key, positive insider trading activity is another way to parse down the marketplace. There are a variety of stimuli for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the useful potential of this method if you understand where to look (learn more here).

Now, it’s important to take a gander at the key action regarding Mednax Inc. (NYSE:MD).

Hedge fund activity in Mednax Inc. (NYSE:MD)

In preparation for this year, a total of 14 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Mednax Inc. (NYSE:MD). Royce & Associates has a $65 million position in the stock, comprising 0.2% of its 13F portfolio. On Royce & Associates’s heels is Citadel Investment Group, managed by Ken Griffin, which held a $8 million position; 0% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include D. E. Shaw’s D E Shaw, Andreas Halvorsen’s Viking Global and Steven Cohen’s SAC Capital Advisors.

Judging by the fact that Mednax Inc. (NYSE:MD) has witnessed falling interest from the smart money, logic holds that there were a few money managers who sold off their positions entirely last quarter. It’s worth mentioning that SAC Subsidiary’s Sigma Capital Management dropped the biggest stake of the “upper crust” of funds we track, worth an estimated $1 million in stock.. Andy Redleaf’s fund, Whitebox Advisors, also said goodbye to its stock, about $1 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Mednax Inc. (NYSE:MD)

Bullish insider trading is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time period, Mednax Inc. (NYSE:MD) has seen zero unique insiders buying, and 11 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Mednax Inc. (NYSE:MD). These stocks are Hanger Inc (NYSE:HGR), Acadia Healthcare Company Inc (NASDAQ:ACHC), DaVita HealthCare Partners Inc (NYSE:DVA), Fresenius Medical Care AG & Co. (ADR) (NYSE:FMS), and HEALTHSOUTH Corp. (NYSE:HLS). This group of stocks are in the specialized health services industry and their market caps are similar to MD’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Hanger Inc (NYSE:HGR) 9 0 13
Acadia Healthcare Company Inc (NASDAQ:ACHC) 17 1 16
DaVita HealthCare Partners Inc (NYSE:DVA) 31 1 10
Fresenius Medical Care AG & Co. (ADR) (NYSE:FMS) 6 0 0
HEALTHSOUTH Corp. (NYSE:HLS) 21 1 0

With the results shown by our time-tested strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and Mednax Inc. (NYSE:MD) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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