Medidata Solutions Inc (NASDAQ:MDSO) was in 11 hedge funds’ portfolio at the end of the fourth quarter of 2012. MDSO has seen an increase in enthusiasm from smart money in recent months. There were 9 hedge funds in our database with MDSO holdings at the end of the previous quarter.
If you’d ask most shareholders, hedge funds are seen as unimportant, outdated financial vehicles of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey hone in on the bigwigs of this club, about 450 funds. It is estimated that this group controls the majority of the smart money’s total asset base, and by tracking their highest performing equity investments, we have formulated a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outstripped 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 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as key, optimistic insider trading sentiment is another way to parse down the world of equities. As the old adage goes: there are lots of motivations for an executive to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if investors understand where to look (learn more here).
Keeping this in mind, we’re going to take a gander at the recent action encompassing Medidata Solutions Inc (NASDAQ:MDSO).
How are hedge funds trading Medidata Solutions Inc (NASDAQ:MDSO)?
At the end of the fourth quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 22% from the previous quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably.
Of the funds we track, SAC Subsidiary’s CR Intrinsic Investors had the biggest position in Medidata Solutions Inc (NASDAQ:MDSO), worth close to $9 million, accounting for 0.4% of its total 13F portfolio. Coming in second is Cupps Capital Management, managed by Drew Cupps, which held a $8 million position; 0% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Spencer M. Waxman’s Shannon River Fund Management, Richard Driehaus’s Driehaus Capital and Jim Simons’s Renaissance Technologies.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, initiated the largest position in Medidata Solutions Inc (NASDAQ:MDSO). Renaissance Technologies had 2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2 million position during the quarter. The other funds with brand new MDSO positions are Ken Griffin’s Citadel Investment Group and Mike Vranos’s Ellington.
How have insiders been trading Medidata Solutions Inc (NASDAQ:MDSO)?
Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past 180 days. Over the latest half-year time frame, Medidata Solutions Inc (NASDAQ:MDSO) has experienced zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Medidata Solutions Inc (NASDAQ:MDSO). These stocks are WebMD Health Corp. (NASDAQ:WBMD), MedAssets, Inc. (NASDAQ:MDAS), Quality Systems, Inc. (NASDAQ:QSII), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), and Computer Programs & Systems, Inc. (NASDAQ:CPSI). This group of stocks are the members of the healthcare information services industry and their market caps match MDSO’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|WebMD Health Corp. (NASDAQ:WBMD)||13||0||0|
|MedAssets, Inc. (NASDAQ:MDAS)||18||0||8|
|Quality Systems, Inc. (NASDAQ:QSII)||11||1||0|
|Allscripts Healthcare Solutions Inc (NASDAQ:MDRX)||34||5||2|
|Computer Programs & Systems, Inc. (NASDAQ:CPSI)||8||3||1|
With the returns shown by our research, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Medidata Solutions Inc (NASDAQ:MDSO) is an important part of this process.
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.