There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Molina Healthcare, Inc. (NYSE:MOH).
Is Molina Healthcare, Inc. (NYSE:MOH) going to take off soon? Hedge funds are turning bullish. The number of bullish hedge fund bets went up by 1 in recent months. Our calculations also showed that MOH isn’t among the 30 most popular stocks among hedge funds.
To most shareholders, hedge funds are assumed to be unimportant, outdated financial vehicles of years past. While there are more than 8,000 funds in operation at the moment, Our researchers look at the aristocrats of this group, approximately 700 funds. These money managers oversee the majority of all hedge funds’ total capital, and by watching their matchless equity investments, Insider Monkey has revealed many investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s take a peek at the fresh hedge fund action encompassing Molina Healthcare, Inc. (NYSE:MOH).
How have hedgies been trading Molina Healthcare, Inc. (NYSE:MOH)?
Heading into the fourth quarter of 2018, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. By comparison, 31 hedge funds held shares or bullish call options in MOH heading into this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Molina Healthcare, Inc. (NYSE:MOH), with a stake worth $556 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $153.9 million. Iridian Asset Management, Millennium Management, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, specific money managers were breaking ground themselves. OrbiMed Advisors, managed by Samuel Isaly, established the most valuable position in Molina Healthcare, Inc. (NYSE:MOH). OrbiMed Advisors had $72.7 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $10.5 million investment in the stock during the quarter. The following funds were also among the new MOH investors: Brad Farber’s Atika Capital, Israel Englander’s Millennium Management, and George Zweig, Shane Haas and Ravi Chander’s Signition LP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Molina Healthcare, Inc. (NYSE:MOH) but similarly valued. These stocks are Paycom Software Inc (NYSE:PAYC), A. O. Smith Corporation (NYSE:AOS), West Pharmaceutical Services Inc. (NYSE:WST), and Autohome Inc (NYSE:ATHM). This group of stocks’ market caps match MOH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PAYC | 23 | 213612 | 2 |
| AOS | 33 | 738739 | 12 |
| WST | 17 | 252641 | 4 |
| ATHM | 18 | 615842 | 0 |
| Average | 22.75 | 455209 | 4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $455 million. That figure was $1.52 billion in MOH’s case. A. O. Smith Corporation (NYSE:AOS) is the most popular stock in this table. On the other hand West Pharmaceutical Services Inc. (NYSE:WST) is the least popular one with only 17 bullish hedge fund positions. Molina Healthcare, Inc. (NYSE:MOH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AOS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
