Should I Buy Medifast, Inc. (MED)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of Medifast, Inc. (NYSE:MED).

Medifast, Inc. (NYSE:MED) investors should pay attention to an increase in hedge fund interest recently. Medifast, Inc. (NYSE:MED) was in 22 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. There were 18 hedge funds in our database with MED holdings at the end of December. Our calculations also showed that MED isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. Now let’s check out the recent hedge fund action surrounding Medifast, Inc. (NYSE:MED).

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

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in MED a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Medifast, Inc. (NYSE:MED) was held by Renaissance Technologies, which reported holding $189.5 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $23.9 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position TwinBeech Capital allocated the biggest weight to Medifast, Inc. (NYSE:MED), around 0.27% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.24 percent of its 13F equity portfolio to MED.

As industrywide interest jumped, specific money managers have jumped into Medifast, Inc. (NYSE:MED) headfirst. TwinBeech Capital, managed by Jinghua Yan, assembled the most outsized position in Medifast, Inc. (NYSE:MED). TwinBeech Capital had $1.9 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $1 million position during the quarter. The other funds with brand new MED positions are Matthew Hulsizer’s PEAK6 Capital Management, Brian J. Higgins’s King Street Capital, and D. E. Shaw’s D E Shaw.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Medifast, Inc. (NYSE:MED) but similarly valued. These stocks are Ameresco Inc (NYSE:AMRC), Rush Enterprises, Inc. (NASDAQ:RUSHB), Telephone & Data Systems, Inc. (NYSE:TDS), First Bancorp (NYSE:FBP), Academy Sports and Outdoors, Inc. (NASDAQ:ASO), Telos Corporation (NASDAQ:TLS), and Green Dot Corporation (NYSE:GDOT). This group of stocks’ market values match MED’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMRC 16 77274 1
RUSHB 4 54912 1
TDS 20 253689 -4
FBP 25 294812 2
ASO 37 409605 11
TLS 15 151370 -13
GDOT 26 513759 -6
Average 20.4 250774 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $251 million. That figure was $287 million in MED’s case. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 4 bullish hedge fund positions. Medifast, Inc. (NYSE:MED) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MED is 59.8. 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 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on MED as the stock returned 25.9% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Medifast Inc (NYSE:MED)

Suggested Articles:

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