MultiPlan Corporation (MPLN): Are Hedge Funds Right About This Stock?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards MultiPlan Corporation (NYSE:MPLN).

Is MultiPlan Corporation (NYSE:MPLN) a good stock to buy now? Hedge funds were taking an optimistic view. The number of bullish hedge fund positions increased by 11 lately. MultiPlan Corporation (NYSE:MPLN) was in 27 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that MPLN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 16 hedge funds in our database with MPLN positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a look at the recent hedge fund action encompassing MultiPlan Corporation (NYSE:MPLN).

Paul Marshall of Marshall Wace

Do Hedge Funds Think MPLN Is A Good Stock To Buy Now?

At third quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 69% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MPLN over the last 25 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Leonard Green & Partners, managed by Leonard Green, holds the most valuable position in MultiPlan Corporation (NYSE:MPLN). Leonard Green & Partners has a $216.5 million position in the stock, comprising 1.7% of its 13F portfolio. The second most bullish fund manager is Magnetar Capital, managed by Alec Litowitz and Ross Laser, which holds a $24.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions contain Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Leonard Green & Partners allocated the biggest weight to MultiPlan Corporation (NYSE:MPLN), around 1.67% of its 13F portfolio. Birch Grove Capital is also relatively very bullish on the stock, dishing out 0.49 percent of its 13F equity portfolio to MPLN.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in MultiPlan Corporation (NYSE:MPLN). Millennium Management had $14.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $10.1 million investment in the stock during the quarter. The following funds were also among the new MPLN investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Paul Tudor Jones’s Tudor Investment Corp, and Louis Bacon’s Moore Global Investments.

Let’s now take a look at hedge fund activity in other stocks similar to MultiPlan Corporation (NYSE:MPLN). These stocks are Brighthouse Financial, Inc. (NASDAQ:BHF), Atlas Corp. (NYSE:ATCO), Investors Bancorp, Inc. (NASDAQ:ISBC), Rent-A-Center Inc (NASDAQ:RCII), Allison Transmission Holdings Inc (NYSE:ALSN), Freedom Holding Corp. (NASDAQ:FRHC), and Livent Corporation (NYSE:LTHM). This group of stocks’ market values match MPLN’s market value.

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As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $433 million. That figure was $298 million in MPLN’s case. Brighthouse Financial, Inc. (NASDAQ:BHF) is the most popular stock in this table. On the other hand Freedom Holding Corp. (NASDAQ:FRHC) is the least popular one with only 12 bullish hedge fund positions. MultiPlan Corporation (NYSE:MPLN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MPLN is 78.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately MPLN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MPLN were disappointed as the stock returned -26.1% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.