Is Myriad Genetics, Inc. (MYGN) A Good Stock To Buy?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a 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 Myriad Genetics, Inc. (NASDAQ:MYGN), and what that likely means for the prospects of the company and its stock.

Myriad Genetics, Inc. (NASDAQ:MYGN) investors should be aware of an increase in activity from the world’s largest hedge funds of late. 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 TCF Financial Corporation (NYSE:TCB), New Jersey Resources Corp (NYSE:NJR), and TAL Education Group (ADR) (NYSE:XRS) to gather more data points.

At the moment there are a multitude of signals investors put to use to appraise stocks. Two of the less utilized signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can trounce their index-focused peers by a superb amount (see the details here).

With all of this in mind, we’re going to take a peek at the latest action surrounding Myriad Genetics, Inc. (NASDAQ:MYGN).

Hedge fund activity in Myriad Genetics, Inc. (NASDAQ:MYGN)

At the Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Scopia Capital, managed by Matt Sirovich and Jeremy Mindich, holds the number one position in Myriad Genetics, Inc. (NASDAQ:MYGN). Scopia Capital has a $254.2 million position in the stock, comprising 5.5% of its 13F portfolio. Coming in second is David Cohen and Harold Levy’s Iridian Asset Management, with a $197.9 million position; 1.7% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Chuck Royce’s Royce & Associates, D. E. Shaw’s D E Shaw and Jim Simons’ Renaissance Technologies.

As aggregate interest increased, key money managers were leading the bulls’ herd. Buckingham Capital Management, managed by David Keidan, assembled the most valuable position in Myriad Genetics, Inc. (NASDAQ:MYGN). Buckingham Capital Management had $7.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.5 million position during the quarter. The other funds with brand new MYGN positions are Paul Tudor Jones’s Tudor Investment Corp, Mike Vranos’s Ellington, and Brian Taylor’s Pine River Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Myriad Genetics, Inc. (NASDAQ:MYGN) but similarly valued. We will take a look at TCF Financial Corporation (NYSE:TCB), New Jersey Resources Corp (NYSE:NJR), TAL Education Group (ADR) (NYSE:XRS), and Mindray Medical International Ltd (ADR) (NYSE:MR). This group of stocks’ market caps resemble MYGN’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $124 million, significantly below in comparison to the $734 million in MYGN’s case. TCF Financial Corporation (NYSE:TCB) is the most popular stock in this table. On the other hand Mindray Medical International Ltd (ADR) (NYSE:MR) is the least popular one with only 10 bullish hedge fund positions. Myriad Genetics, Inc. (NASDAQ:MYGN) 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 TCB might be a better candidate to consider a long position.