Molina Healthcare, Inc. (MOH)’s Shares Hit All-Time High After Posting Second Quarter Results

An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Visium can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 66 percentage points and returning over 123%, while hedge funds themselves have collectively underperformed the market (read the details here).

The insiders at Molina Healthcare, Inc. (NYSE:MOH) have been disposing of their shares of the company, with at least 34 insider sales transactions in 2015. The CEO, Mr. Molina, was among the major shareholders shipping off some of their shares in the company, as he sold 196,000 shares of the company in 2015. William Dentino was another insider selling shares in the company, more than 200,000 shares total in 2015.

With positive hedge fund sentiment and second quarter financial results, we recommend a long position in Molina Healthcare.

Disclosure: None