Hedge Funds Are Souring On Molina Healthcare, Inc. (MOH)

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Molina Healthcare, Inc. (NYSE:MOH).

Molina Healthcare, Inc. (NYSE:MOH) investors should pay attention to a decrease in hedge fund interest lately. Molina Healthcare, Inc. (NYSE:MOH) was in 28 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. There were 34 hedge funds in our database with MOH positions at the end of the second quarter. Our calculations also showed that MOH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a glance at the fresh hedge fund action encompassing Molina Healthcare, Inc. (NYSE:MOH).

Do Hedge Funds Think MOH Is A Good Stock To Buy Now?

At third quarter’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MOH over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Molina Healthcare, Inc. (NYSE:MOH) was held by Renaissance Technologies, which reported holding $555.5 million worth of stock at the end of September. It was followed by Viking Global with a $253.7 million position. Other investors bullish on the company included Arrowstreet Capital, AQR Capital Management, and Iridian Asset Management. In terms of the portfolio weights assigned to each position Iron Triangle Partners allocated the biggest weight to Molina Healthcare, Inc. (NYSE:MOH), around 4.32% of its 13F portfolio. Iridian Asset Management is also relatively very bullish on the stock, dishing out 2.9 percent of its 13F equity portfolio to MOH.

Because Molina Healthcare, Inc. (NYSE:MOH) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of hedge funds who sold off their full holdings in the third quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest position of the 750 funds monitored by Insider Monkey, comprising an estimated $6.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $1.3 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Molina Healthcare, Inc. (NYSE:MOH). These stocks are Quanta Services Inc (NYSE:PWR), IDEX Corporation (NYSE:IEX), UDR, Inc. (NYSE:UDR), The Liberty SiriusXM Group (NASDAQ:LSXMA), Textron Inc. (NYSE:TXT), Brown & Brown, Inc. (NYSE:BRO), and Omnicom Group Inc. (NYSE:OMC). This group of stocks’ market valuations match MOH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $1108 million. That figure was $1539 million in MOH’s case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 18 bullish hedge fund positions. Molina Healthcare, Inc. (NYSE:MOH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MOH is 42.2. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on MOH as the stock returned 8.8% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.

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