We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Medpace Holdings, Inc. (NASDAQ:MEDP) and determine whether hedge funds skillfully traded this stock.
Medpace Holdings, Inc. (NASDAQ:MEDP) has experienced an increase in activity from the world’s largest hedge funds lately. Medpace Holdings, Inc. (NASDAQ:MEDP) was in 22 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 26. Our calculations also showed that MEDP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are perceived as slow, old investment vehicles of yesteryear. While there are more than 8000 funds trading today, We hone in on the leaders of this group, approximately 850 funds. It is estimated that this group of investors watch over bulk of the smart money’s total capital, and by watching their matchless picks, Insider Monkey has found a few investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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 precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Keeping this in mind let’s take a gander at the recent hedge fund action encompassing Medpace Holdings, Inc. (NASDAQ:MEDP).
Hedge fund activity in Medpace Holdings, Inc. (NASDAQ:MEDP)
At Q2’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MEDP over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Medpace Holdings, Inc. (NASDAQ:MEDP), with a stake worth $81.2 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $33.4 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 Prescott Group Capital Management allocated the biggest weight to Medpace Holdings, Inc. (NASDAQ:MEDP), around 0.55% of its 13F portfolio. Shanda Asset Management is also relatively very bullish on the stock, earmarking 0.36 percent of its 13F equity portfolio to MEDP.
Now, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the largest position in Medpace Holdings, Inc. (NASDAQ:MEDP). Millennium Management had $2.2 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $1.9 million position during the quarter. The following funds were also among the new MEDP investors: Dmitry Balyasny’s Balyasny Asset Management, Parvinder Thiara’s Athanor Capital, and Bruce Kovner’s Caxton Associates LP.
Let’s go over hedge fund activity in other stocks similar to Medpace Holdings, Inc. (NASDAQ:MEDP). We will take a look at Murphy USA Inc. (NYSE:MUSA), AutoNation, Inc. (NYSE:AN), Kohl’s Corporation (NYSE:KSS), Brooks Automation, Inc. (NASDAQ:BRKS), Avita Medical Limited (NASDAQ:RCEL), Xerox Holdings Corporation (NYSE:XRX), and Cohen & Steers, Inc. (NYSE:CNS). This group of stocks’ market values match MEDP’s market value.
|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 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $220 million in MEDP’s case. Kohl’s Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Avita Medical Limited (NASDAQ:RCEL) is the least popular one with only 2 bullish hedge fund positions. Medpace Holdings, Inc. (NASDAQ:MEDP) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MEDP is 60.4. 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. 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on MEDP as the stock returned 20.1% in the third quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.