Do Hedge Funds and Insiders Love MAXIMUS, Inc. (MMS)?

MAXIMUS, Inc. (NYSE:MMS) shareholders have witnessed a decrease in enthusiasm from smart money lately.

In the eyes of most traders, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are over 8000 funds in operation at present, we choose to focus on the upper echelon of this group, about 450 funds. Most estimates calculate that this group has its hands on the majority of all hedge funds’ total asset base, and by watching their highest performing picks, we have discovered a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as important, optimistic insider trading sentiment is a second way to parse down the investments you’re interested in. There are many stimuli for an executive to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if you know what to do (learn more here).

Now, we’re going to take a gander at the recent action regarding MAXIMUS, Inc. (NYSE:MMS).

Hedge fund activity in MAXIMUS, Inc. (NYSE:MMS)

At Q1’s end, a total of 13 of the hedge funds we track held long positions in this stock, a change of -7% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in MAXIMUS, Inc. (NYSE:MMS), worth close to $84.7 million, comprising 0.2% of its total 13F portfolio. Coming in second is Mariko Gordon of Daruma Asset Management, with a $71.5 million position; 3.6% of its 13F portfolio is allocated to the company. Some other hedgies with similar optimism include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Jeffrey Vinik’s Vinik Asset Management.

Because MAXIMUS, Inc. (NYSE:MMS) has faced a declination in interest from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that slashed their entire stakes heading into Q2. At the top of the heap, Matthew Tewksbury’s Stevens Capital Management cut the biggest position of all the hedgies we monitor, totaling close to $0.7 million in stock., and Matthew Hulsizer of PEAK6 Capital Management was right behind this move, as the fund cut about $0 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds heading into Q2.

What have insiders been doing with MAXIMUS, Inc. (NYSE:MMS)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has experienced transactions within the past 180 days. Over the latest six-month time frame, MAXIMUS, Inc. (NYSE:MMS) has experienced zero unique insiders purchasing, and 11 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to MAXIMUS, Inc. (NYSE:MMS). These stocks are Lender Processing Services, Inc. (NYSE:LPS), RR Donnelley & Sons Co (NASDAQ:RRD), Ritchie Bros. Auctioneers (USA) (NYSE:RBA), HMS Holdings Corp. (NASDAQ:HMSY), and WEX Inc (NYSE:WXS). This group of stocks are in the business services industry and their market caps are closest to MMS’s market cap.

With the results shown by Insider Monkey’s time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and MAXIMUS, Inc. (NYSE:MMS) is no exception.

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