Hedge Funds Are Dumping Mednax Inc. (MD)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Mednax Inc. (NYSE:MD) based on that data.

Is Mednax Inc. (NYSE:MD) a buy right now? The smart money is becoming less hopeful. The number of long hedge fund positions shrunk by 7 lately. Our calculations also showed that MD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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Jeff Smith

Jeffrey Smith of Starboard Value LP

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the key hedge fund action regarding Mednax Inc. (NYSE:MD).

How have hedgies been trading Mednax Inc. (NYSE:MD)?

At the end of the first quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MD over the last 18 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.

Among these funds, Starboard Value LP held the most valuable stake in Mednax Inc. (NYSE:MD), which was worth $91.8 million at the end of the third quarter. On the second spot was P2 Capital Partners which amassed $45.4 million worth of shares. Healthcor Management LP, D E Shaw, and Clearline 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 P2 Capital Partners allocated the biggest weight to Mednax Inc. (NYSE:MD), around 5.43% of its 13F portfolio. Starboard Value LP is also relatively very bullish on the stock, designating 3.72 percent of its 13F equity portfolio to MD.

Seeing as Mednax Inc. (NYSE:MD) has faced falling interest from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their full holdings in the first quarter. Interestingly, Stephen DuBois’s Camber Capital Management sold off the largest investment of all the hedgies watched by Insider Monkey, comprising close to $22 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $12.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 7 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Mednax Inc. (NYSE:MD). We will take a look at Akebia Therapeutics Inc (NASDAQ:AKBA), JELD-WEN Holding, Inc. (NYSE:JELD), Methode Electronics Inc. (NYSE:MEI), and Meritor Inc (NYSE:MTOR). This group of stocks’ market valuations resemble MD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKBA 18 340546 2
JELD 20 144013 -9
MEI 13 71718 -1
MTOR 17 166288 -12
Average 17 180641 -5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $238 million in MD’s case. JELD-WEN Holding, Inc. (NYSE:JELD) is the most popular stock in this table. On the other hand Methode Electronics Inc. (NYSE:MEI) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Mednax Inc. (NYSE:MD) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on MD as the stock returned 33.4% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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