Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about MAXIMUS, Inc. (NYSE:MMS) in this article.
Is MMS a good stock to buy now? Hedge funds were in a bearish mood. The number of bullish hedge fund positions shrunk by 4 lately. MAXIMUS, Inc. (NYSE:MMS) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 26. Our calculations also showed that MMS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with MMS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are tons of tools investors use to grade stocks. Two of the most innovative tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best fund managers can outpace their index-focused peers by a healthy amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a gander at the recent hedge fund action encompassing MAXIMUS, Inc. (NYSE:MMS).
Do Hedge Funds Think MMS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the second quarter of 2020. On the other hand, there were a total of 26 hedge funds with a bullish position in MMS a year ago. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in MAXIMUS, Inc. (NYSE:MMS) was held by GLG Partners, which reported holding $27.9 million worth of stock at the end of September. It was followed by AQR Capital Management with a $24.6 million position. Other investors bullish on the company included Renaissance Technologies, P2 Capital Partners, and 12th Street Asset Management. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to MAXIMUS, Inc. (NYSE:MMS), around 2.46% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, dishing out 1.61 percent of its 13F equity portfolio to MMS.
Since MAXIMUS, Inc. (NYSE:MMS) has experienced a decline in interest from hedge fund managers, it’s easy to see that there is a sect of money managers who sold off their full holdings by the end of the third quarter. Intriguingly, Michael Gelband’s ExodusPoint Capital sold off the largest position of the 750 funds followed by Insider Monkey, comprising close to $1.8 million in stock. Michael Rockefeller and KarláKroeker’s fund, Woodline Partners, also cut its stock, about $1.4 million worth. These moves are interesting, as total hedge fund interest was cut by 4 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as MAXIMUS, Inc. (NYSE:MMS) but similarly valued. We will take a look at DouYu International Holdings Limited (NASDAQ:DOYU), Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC), MorphoSys AG (NASDAQ:MOR), Essent Group Ltd (NYSE:ESNT), Meritage Homes Corp (NYSE:MTH), Neogen Corporation (NASDAQ:NEOG), and CMC Materials, Inc. (NASDAQ:CCMP). This group of stocks’ market caps match MMS’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 16 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $127 million in MMS’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 4 bullish hedge fund positions. MAXIMUS, Inc. (NYSE:MMS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MMS is 69.2. 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately MMS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MMS were disappointed as the stock returned 6.2% since the end of September (through 12/14) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 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.