In this article we will take a look at whether hedge funds think Medpace Holdings, Inc. (NASDAQ:MEDP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Medpace Holdings, Inc. (NASDAQ:MEDP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare MEDP to other stocks including Ultrapar Participacoes SA (NYSE:UGP), Braskem SA (NYSE:BAK), and NuVasive, Inc. (NASDAQ:NUVA) to get a better sense of its popularity.
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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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. Now let’s analyze the recent hedge fund action regarding Medpace Holdings, Inc. (NASDAQ:MEDP).
How have hedgies been trading Medpace Holdings, Inc. (NASDAQ:MEDP)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MEDP over the last 18 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Medpace Holdings, Inc. (NASDAQ:MEDP), with a stake worth $60.1 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $27.7 million. Arrowstreet Capital, D E Shaw, and GLG Partners 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 Shanda Asset Management allocated the biggest weight to Medpace Holdings, Inc. (NASDAQ:MEDP), around 0.74% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, dishing out 0.61 percent of its 13F equity portfolio to MEDP.
Judging by the fact that Medpace Holdings, Inc. (NASDAQ:MEDP) has experienced a decline in interest from hedge fund managers, we can see that there were a few hedge funds that slashed their full holdings heading into Q4. At the top of the heap, Alec Litowitz and Ross Laser’s Magnetar Capital dumped the largest investment of the 750 funds watched by Insider Monkey, valued at close to $0.9 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $0.6 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Medpace Holdings, Inc. (NASDAQ:MEDP). These stocks are Ultrapar Participacoes SA (NYSE:UGP), Braskem SA (NYSE:BAK), NuVasive, Inc. (NASDAQ:NUVA), and VEON Ltd. (NASDAQ:VEON). This group of stocks’ market caps resemble MEDP’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 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $183 million in MEDP’s case. NuVasive, Inc. (NASDAQ:NUVA) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 5 bullish hedge fund positions. Medpace Holdings, Inc. (NASDAQ:MEDP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately MEDP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MEDP were disappointed as the stock returned 20.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.