Is ModivCare Inc. (MODV) Going to Burn These Hedge Funds?

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about ModivCare Inc. (NASDAQ:MODV).

Is ModivCare Inc. (NASDAQ:MODV) an outstanding stock to buy now? The smart money was getting less bullish. The number of long hedge fund positions were trimmed by 1 in recent months. ModivCare Inc. (NASDAQ:MODV) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that MODV isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 analyze the latest hedge fund action encompassing ModivCare Inc. (NASDAQ:MODV).

Peter Algert of Algert Global

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

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2021. On the other hand, there were a total of 15 hedge funds with a bullish position in MODV a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Christopher Shackelton and Adam Gray’s Coliseum Capital has the number one position in ModivCare Inc. (NASDAQ:MODV), worth close to $232.8 million, accounting for 20.7% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, holding a $118.9 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish include Steven Ng and Andrew Mitchell’s Ophir Asset Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Amy Minella’s Cardinal Capital. In terms of the portfolio weights assigned to each position Coliseum Capital allocated the biggest weight to ModivCare Inc. (NASDAQ:MODV), around 20.67% of its 13F portfolio. Ophir Asset Management is also relatively very bullish on the stock, earmarking 8.08 percent of its 13F equity portfolio to MODV.

Since ModivCare Inc. (NASDAQ:MODV) has faced bearish sentiment from hedge fund managers, it’s safe to say that there exists a select few hedgies that elected to cut their full holdings by the end of the third quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group cut the biggest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $2 million in stock, and Mika Toikka’s AlphaCrest Capital Management was right behind this move, as the fund sold off about $1.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to ModivCare Inc. (NASDAQ:MODV). These stocks are Stepan Company (NYSE:SCL), Plexus Corp. (NASDAQ:PLXS), SmartRent, Inc. (NYSE:SMRT), Renewable Energy Group Inc (NASDAQ:REGI), Primo Water Corporation (NYSE:PRMW), Myriad Genetics, Inc. (NASDAQ:MYGN), and Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (NYSE:VLRS). All of these stocks’ market caps match MODV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SCL 9 14505 -5
PLXS 16 71577 -1
SMRT 15 213813 15
REGI 15 40438 -2
PRMW 31 617009 7
MYGN 17 379952 3
VLRS 13 341698 -3
Average 16.6 239856 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $240 million. That figure was $564 million in MODV’s case. Primo Water Corporation (NYSE:PRMW) is the most popular stock in this table. On the other hand Stepan Company (NYSE:SCL) is the least popular one with only 9 bullish hedge fund positions. ModivCare Inc. (NASDAQ:MODV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MODV is 59.9. 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 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately MODV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MODV were disappointed as the stock returned -18.4% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Follow Modivcare Inc (NASDAQ:MODV)

Suggested Articles:

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