Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Molina Healthcare, Inc. (NYSE:MOH).
Molina Healthcare, Inc. (NYSE:MOH) has seen an increase in hedge fund interest of late. Molina Healthcare, Inc. (NYSE:MOH) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that MOH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a look at the recent hedge fund action surrounding Molina Healthcare, Inc. (NYSE:MOH).
Do Hedge Funds Think MOH Is A Good Stock To Buy Now?
At first quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the fourth quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in MOH a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Molina Healthcare, Inc. (NYSE:MOH), which was worth $576.5 million at the end of the fourth quarter. On the second spot was Viking Global which amassed $335.2 million worth of shares. Iridian Asset Management, AQR Capital Management, and Glenview Capital 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 Iron Triangle Partners allocated the biggest weight to Molina Healthcare, Inc. (NYSE:MOH), around 5.94% of its 13F portfolio. Sivik Global Healthcare is also relatively very bullish on the stock, designating 2.98 percent of its 13F equity portfolio to MOH.
As one would reasonably expect, some big names have jumped into Molina Healthcare, Inc. (NYSE:MOH) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Molina Healthcare, Inc. (NYSE:MOH). Millennium Management had $12.5 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Mika Toikka’s AlphaCrest Capital Management, Nathan Przybylo’s L2 Asset Management, and Noam Gottesman’s GLG Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Molina Healthcare, Inc. (NYSE:MOH) but similarly valued. We will take a look at The Scotts Miracle-Gro Company (NYSE:SMG), Dynatrace, Inc. (NYSE:DT), Leidos Holdings Inc (NYSE:LDOS), James Hardie Industries plc (NYSE:JHX), NovoCure Limited (NASDAQ:NVCR), Alliant Energy Corporation (NASDAQ:LNT), and Evergy, Inc. (NYSE:EVRG). This group of stocks’ market caps resemble MOH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $540 million. That figure was $1561 million in MOH’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. Molina Healthcare, Inc. (NYSE:MOH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOH is 63.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Hedge funds were also right about betting on MOH, though not to the same extent, as the stock returned 9.9% since Q1 (through July 2nd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.