Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The one and a half month time period since the end of the third quarter is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by about 4 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Medpace Holdings, Inc. (NASDAQ:MEDP).
Medpace Holdings, Inc. (NASDAQ:MEDP) shareholders have witnessed an increase in enthusiasm from smart money recently. Our calculations also showed that MEDP isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s take a glance at the new hedge fund action regarding Medpace Holdings, Inc. (NASDAQ:MEDP).
Hedge fund activity in Medpace Holdings, Inc. (NASDAQ:MEDP)
Heading into the fourth quarter of 2018, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MEDP over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Laurion Capital Management was the largest shareholder of Medpace Holdings, Inc. (NASDAQ:MEDP), with a stake worth $66.4 million reported as of the end of September. Trailing Laurion Capital Management was Renaissance Technologies, which amassed a stake valued at $47 million. D E Shaw, GLG Partners, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers have jumped into Medpace Holdings, Inc. (NASDAQ:MEDP) headfirst. Tavio Capital, managed by Amy Mulderry, assembled the most outsized position in Medpace Holdings, Inc. (NASDAQ:MEDP). Tavio Capital had $5.2 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $3.5 million position during the quarter. The following funds were also among the new MEDP investors: Ken Griffin’s Citadel Investment Group, Phil Frohlich’s Prescott Group Capital Management, and Malcolm Fairbairn’s Ascend Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Medpace Holdings, Inc. (NASDAQ:MEDP) but similarly valued. These stocks are Travelport Worldwide Ltd (NYSE:TVPT), ABM Industries, Inc. (NYSE:ABM), BioTelemetry, Inc. (NASDAQ:BEAT), and Globant SA (NYSE:GLOB). This group of stocks’ market caps match MEDP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TVPT | 23 | 253987 | 1 |
| ABM | 11 | 61035 | -3 |
| BEAT | 16 | 67760 | 1 |
| GLOB | 17 | 74680 | -2 |
| Average | 16.75 | 114366 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $286 million in MEDP’s case. Travelport Worldwide Ltd (NYSE:TVPT) is the most popular stock in this table. On the other hand ABM Industries, Inc. (NYSE:ABM) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Medpace Holdings, Inc. (NASDAQ:MEDP) 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. This article was originally published at Insider Monkey.
