We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Mednax Inc. (NYSE:MD).
Mednax Inc. (NYSE:MD) investors should be aware of an increase in hedge fund sentiment recently. Our calculations also showed that MD isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
Today there are a large number of gauges stock traders employ to appraise publicly traded companies. Two of the best gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best money managers can beat the broader indices by a solid margin (see the details here).
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the key hedge fund action surrounding Mednax Inc. (NYSE:MD).
What have hedge funds been doing with Mednax Inc. (NYSE:MD)?
At Q4’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 57% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MD over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, P2 Capital Partners, managed by Claus Moller, holds the most valuable position in Mednax Inc. (NYSE:MD). P2 Capital Partners has a $108.4 million position in the stock, comprising 7.9% of its 13F portfolio. The second most bullish fund manager is Starboard Value LP, managed by Jeffrey Smith, which holds a $107.8 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish comprise D. E. Shaw’s D E Shaw, Arthur B Cohen and Joseph Healey’s Healthcor Management LP and Renaissance Technologies. In terms of the portfolio weights assigned to each position P2 Capital Partners allocated the biggest weight to Mednax Inc. (NYSE:MD), around 7.95% of its 13F portfolio. Starboard Value LP is also relatively very bullish on the stock, designating 3.12 percent of its 13F equity portfolio to MD.
As aggregate interest increased, key money managers were leading the bulls’ herd. Starboard Value LP, managed by Jeffrey Smith, established the most valuable position in Mednax Inc. (NYSE:MD). Starboard Value LP had $107.8 million invested in the company at the end of the quarter. Arthur B Cohen and Joseph Healey’s Healthcor Management LP also initiated a $29.9 million position during the quarter. The other funds with brand new MD positions are Stephen DuBois’s Camber Capital Management, Joseph Samuels’s Islet Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks similar to Mednax Inc. (NYSE:MD). These stocks are Korn Ferry (NYSE:KFY), Meritage Homes Corp (NYSE:MTH), Altra Industrial Motion Corp. (NASDAQ:AIMC), and Holly Energy Partners, L.P. (NYSE:HEP). This group of stocks’ market caps are similar to MD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KFY | 19 | 177220 | -8 |
| MTH | 29 | 249798 | 0 |
| AIMC | 15 | 202883 | 0 |
| HEP | 5 | 21261 | -1 |
| Average | 17 | 162791 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $489 million in MD’s case. Meritage Homes Corp (NYSE:MTH) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Mednax Inc. (NYSE:MD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th and still beat the market by 4.2 percentage points. Unfortunately MD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MD were disappointed as the stock returned -60.8% during the three months of 2020 (through April 6th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
