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Hedge Funds Are Betting On Medidata Solutions Inc (MDSO)

At Insider Monkey, we pore over the filings of more than 700 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Medidata Solutions Inc (NASDAQ:MDSO) makes for a good investment right now.

Is Medidata Solutions Inc (NASDAQ:MDSO) worth your attention right now? Hedge funds are becoming more confident. The number of bullish hedge fund positions went up by 3 in recent months. Our calculations also showed that mdso isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Atterbury - Whetstone Capital

We’re going to take a look at the latest hedge fund action regarding Medidata Solutions Inc (NASDAQ:MDSO).

What does the smart money think about Medidata Solutions Inc (NASDAQ:MDSO)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MDSO over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with MDSO Positions

The largest stake in Medidata Solutions Inc (NASDAQ:MDSO) was held by Royce & Associates, which reported holding $70.8 million worth of stock at the end of September. It was followed by Polar Capital with a $32.8 million position. Other investors bullish on the company included Echo Street Capital Management, Millennium Management, and Whetstone Capital Advisors.

Consequently, specific money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the most valuable position in Medidata Solutions Inc (NASDAQ:MDSO). Millennium Management had $3.6 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.7 million position during the quarter. The following funds were also among the new MDSO investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew Hulsizer’s PEAK6 Capital Management, and Brandon Haley’s Holocene Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Medidata Solutions Inc (NASDAQ:MDSO) but similarly valued. We will take a look at Agios Pharmaceuticals Inc (NASDAQ:AGIO), Associated Banc Corp (NYSE:ASB), Enstar Group Ltd. (NASDAQ:ESGR), and Echostar Corporation (NASDAQ:SATS). This group of stocks’ market values match MDSO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AGIO 22 372204 -1
ASB 17 297669 4
ESGR 10 673382 -1
SATS 28 443489 2
Average 19.25 446686 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $447 million. That figure was $137 million in MDSO’s case. Echostar Corporation (NASDAQ:SATS) is the most popular stock in this table. On the other hand Enstar Group Ltd. (NASDAQ:ESGR) is the least popular one with only 10 bullish hedge fund positions. Medidata Solutions Inc (NASDAQ:MDSO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SATS might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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