Medifast Inc (MED): Are Hedge Funds Right About This Stock?

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Judging by the fact that Medifast Inc (NYSE:MED) has experienced falling interest from the smart money, logic holds that there exists a select few fund managers that slashed their full holdings between July and September. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the biggest stake of all the hedgies tracked by Insider Monkey, valued at an estimated $2.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $0.6 million worth.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Medifast Inc (NYSE:MED) but similarly valued. We will take a look at Western Asset Mortgage Capital Corp (NYSE:WMC), First Community Bancshares Inc (NASDAQ:FCBC), Lion Biotechnologies Inc (NASDAQ:LBIO), and REX American Resources Corp (NYSE:REX). This group of stocks’ market caps match MED’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WMC 6 6129 2
FCBC 4 5955 0
LBIO 19 162742 2
REX 8 68306 2

As you can see these stocks had an average of nine funds with bullish positions and the average amount invested in these stocks was $61 million, versus $88 million in MED’s case. Lion Biotechnologies Inc (NASDAQ:LBIO) is the most popular stock in this table. On the other hand First Community Bancshares Inc (NASDAQ:FCBC) is the least popular one with only four investors holding shares. Medifast Inc (NYSE:MED) 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. In this regard Lion Biotechnologies Inc (NASDAQ:LBIO) might be a better candidate to consider taking a long position in.

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