Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze The Medicines Company (NASDAQ:MDCO) from the perspective of those elite funds.
Is The Medicines Company (NASDAQ:MDCO) an exceptional investment today? The smart money is taking an optimistic view. The number of bullish hedge fund positions went up by 1 lately. MDCO was in 27 hedge funds’ portfolios at the end of the third quarter of 2016. There were 26 hedge funds in our database with MDCO positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as SolarCity Corp (NASDAQ:SCTY), Owens & Minor, Inc. (NYSE:OMI), and Fulton Financial Corp (NASDAQ:FULT) to gather more data points.
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How are hedge funds trading The Medicines Company (NASDAQ:MDCO)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 4% from the second quarter of 2016, as hedge fund ownership of MDCO continues to trend upward. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Keith Meister’s Corvex Capital has the biggest position in The Medicines Company (NASDAQ:MDCO), worth close to $116.5 million, corresponding to 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Roberto Mignone of Bridger Management, with a $79.2 million position; the fund has 5.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Stephen DuBois’ Camber Capital Management, Alex Denner’s Sarissa Capital Management, and Christopher James’ Partner Fund Management.
Now, some big names were breaking ground themselves. Partner Fund Management initiated the largest call position in The Medicines Company (NASDAQ:MDCO). Partner Fund Management had $11.1 million invested in the position at the end of the quarter. Michael Castor’s Sio Capital also made a $6.8 million investment in the stock during the quarter. The following funds were also among the new MDCO investors: Brad Farber’s Atika Capital, Ken Griffin’s Citadel Investment Group, and Vishal Saluja and Pham Quang’s Endurant Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to The Medicines Company (NASDAQ:MDCO). These stocks are SolarCity Corp (NASDAQ:SCTY), Owens & Minor, Inc. (NYSE:OMI), Fulton Financial Corp (NASDAQ:FULT), and Kite Realty Group Trust (NYSE:KRG). This group of stocks’ market values are closest to MDCO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SCTY | 19 | 82586 | -7 |
| OMI | 13 | 128694 | -3 |
| FULT | 10 | 37219 | 2 |
| KRG | 9 | 31587 | -4 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $585 million in MDCO’s case. SolarCity Corp (NASDAQ:SCTY) is the most popular stock in this table. On the other hand Kite Realty Group Trust (NYSE:KRG) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks The Medicines Company (NASDAQ:MDCO) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
