How HMS Holdings Corp (HMSY) Stacks Up Against Its Peers

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards HMS Holdings Corp (NASDAQ:HMSY).

HMS Holdings Corp (NASDAQ:HMSY) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Haemonetics Corporation (NYSE:HAE), Globe Specialty Metals, Inc. (NASDAQ:GSM), and Nelnet, Inc. (NYSE:NNI) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading HMS Holdings Corp (NASDAQ:HMSY)?

At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from one quarter earlier. Hedge fund ownership has yet to rebound to its level of one year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, D E Shaw, founded by David E. Shaw has the largest position in HMS Holdings Corp (NASDAQ:HMSY), worth close to $20.3 million. The second most bullish fund manager is Carson Yost of Yost Capital Management, with a $19.9 million position; 10.7% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions comprise Jim Simons’ Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management and Cliff Asness’ AQR Capital Management.

Because HMS Holdings Corp (NASDAQ:HMSY) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few funds that decided to sell off their positions entirely heading into Q4. At the top of the heap, James Dondero’s Highland Capital Management cut the largest position of all the hedgies monitored by Insider Monkey, worth close to $3.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $1.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as HMS Holdings Corp (NASDAQ:HMSY) but similarly valued. We will take a look at Haemonetics Corporation (NYSE:HAE), Globe Specialty Metals, Inc. (NASDAQ:GSM), Nelnet, Inc. (NYSE:NNI), and Callon Petroleum Company (NYSE:CPE). This group of stocks’ market values match HMSY’s market value.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $257 million. That figure was $98 million in HMSY’s case. Callon Petroleum Company (NYSE:CPE) is the most popular stock in this table. On the other hand Nelnet, Inc. (NYSE:NNI) is the least popular one with only 9 bullish hedge fund positions. HMS Holdings Corp (NASDAQ:HMSY) 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 CPE might be a better candidate to consider a long position in.

Disclosure: None