The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards MAXIMUS, Inc. (NYSE:MMS), and what that likely means for the prospects of the company and its stock.
MAXIMUS, Inc. (NYSE:MMS) has experienced a decrease in support from the world’s most elite money managers recently. MMS was in 20 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with MMS positions at the end of the previous quarter. Our calculations also showed that MMS isn’t among the 30 most popular stocks among hedge funds.
In today’s marketplace there are a multitude of indicators shareholders use to value their stock investments. A couple of the most useful indicators are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a superb amount (see the details here).
Cliff Asness of AQR Capital Management
Let’s take a look at the fresh hedge fund action regarding MAXIMUS, Inc. (NYSE:MMS).
What does the smart money think about MAXIMUS, Inc. (NYSE:MMS)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in MMS heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Claus Moller’s P2 Capital Partners has the number one position in MAXIMUS, Inc. (NYSE:MMS), worth close to $59.5 million, comprising 5.3% of its total 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $58.9 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Cliff Asness’s AQR Capital Management, Noam Gottesman’s GLG Partners and Jim Simons’s Renaissance Technologies.
Due to the fact that MAXIMUS, Inc. (NYSE:MMS) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that George Hall’s Clinton Group sold off the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $3.2 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund said goodbye to about $2.3 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to MAXIMUS, Inc. (NYSE:MMS). These stocks are Mednax Inc. (NYSE:MD), Senior Housing Properties Trust (NASDAQ:SNH), Texas Capital Bancshares Inc (NASDAQ:TCBI), and GDS Holdings Limited (NASDAQ:GDS). This group of stocks’ market values are closest to MMS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MD | 25 | 834722 | -2 |
| SNH | 13 | 66171 | 1 |
| TCBI | 22 | 513914 | 5 |
| GDS | 26 | 670834 | 7 |
| Average | 21.5 | 521410 | 2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $521 million. That figure was $263 million in MMS’s case. GDS Holdings Limited (NASDAQ:GDS) is the most popular stock in this table. On the other hand Senior Housing Properties Trust (NASDAQ:SNH) is the least popular one with only 13 bullish hedge fund positions. MAXIMUS, Inc. (NYSE:MMS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GDS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
