The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Medivation Inc (NASDAQ:MDVN) and see how it was affected.
Medivation Inc (NASDAQ:MDVN) has experienced a decrease in hedge fund interest in recent months. MDVN was in 34 hedge funds’ portfolios at the end of September. There were 39 hedge funds in our database with MDVN positions at the end of the previous quarter. At the end of this article we will also compare MDVN to other stocks, including Advance Auto Parts, Inc. (NYSE:AAP), Rogers Communications Inc. (USA) (NYSE:RCI), and C.R. Bard, Inc. (NYSE:BCR) to get a better sense of its popularity.
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In today’s marketplace there are tons of gauges stock traders put to use to evaluate stocks. A duo of the most useful gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best money managers can trounce the broader indices by a very impressive amount (see the details here).
Keeping this in mind, let’s review the fresh action surrounding Medivation Inc (NASDAQ:MDVN).
What have hedge funds been doing with Medivation Inc (NASDAQ:MDVN)?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Fred Knoll’s Knoll Capital Management has the number one position in Medivation Inc (NASDAQ:MDVN), worth close to $186.9 million, amounting to 79.3% of its total 13F portfolio. Coming in second is Rob Citrone’s Discovery Capital Management, with a $160.3 million position; 1.8% of its 13F portfolio is allocated to the stock. The remaining members of the smart money that are bullish comprise Phill Gross and Robert Atchinson’s Adage Capital Management, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw.
Judging by the fact that Medivation Inc (NASDAQ:MDVN) has experienced a fall in interest from the aggregate hedge fund industry, we can see that there was a specific group of hedge funds that slashed their full holdings in the third quarter. Interestingly, Samuel Isaly’s OrbiMed Advisors cut the largest position of all the hedgies monitored by Insider Monkey, totaling an estimated $161.4 million in stock. Julian Baker and Felix Baker’s fund, Baker Bros. Advisors, also dropped its stock, about $75 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Medivation Inc (NASDAQ:MDVN). We will take a look at Advance Auto Parts, Inc. (NYSE:AAP), Rogers Communications Inc. (USA) (NYSE:RCI), C.R. Bard, Inc. (NYSE:BCR), and Magellan Midstream Partners, L.P. (NYSE:MMP). This group of stocks’ market values resemble MDVN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAP | 44 | 1678166 | 10 |
| RCI | 15 | 134144 | 1 |
| BCR | 34 | 1272552 | 8 |
| MMP | 15 | 187023 | 3 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $818 million. That figure was $1.16 billion in MDVN’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table, while Rogers Communications Inc. (USA) (NYSE:RCI) is the least popular one with only 15 bullish hedge fund positions. Medivation Inc (NASDAQ:MDVN) 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 AAP might be a better candidate to consider a long position.
