This Metric Says You Are Smart to Buy HMS Holdings Corp. (HMSY)

Should HMS Holdings Corp. (NASDAQ:HMSY) investors track the following data?

In the 21st century investor’s toolkit, there are a multitude of metrics investors can use to watch their holdings. A couple of the most underrated are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top hedge fund managers can trounce the market by a solid margin (see just how much).

Equally as crucial, bullish insider trading activity is a second way to analyze the marketplace. Obviously, there are a number of reasons for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the impressive potential of this tactic if piggybackers understand what to do (learn more here).

Thus, let’s analyze the newest info surrounding HMS Holdings Corp. (NASDAQ:HMSY).

What have hedge funds been doing with HMS Holdings Corp. (NASDAQ:HMSY)?

At Q2’s end, a total of 14 of the hedge funds we track held long positions in this stock, a change of 40% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially.

When using filings from the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in HMS Holdings Corp. (NASDAQ:HMSY), worth close to $10 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Steven Cohen of SAC Capital Advisors, with a $8.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Rathjens Bruce Clarke and John Campbell’s Arrowstreet Capital and Brian Taylor’s Pine River Capital Management.

As aggregate interest spiked, specific money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, initiated the largest position in HMS Holdings Corp. (NASDAQ:HMSY). Renaissance Technologies had 10 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also made a $8.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Brian Taylor’s Pine River Capital Management.

What have insiders been doing with HMS Holdings Corp. (NASDAQ:HMSY)?

Bullish insider trading is most useful when the company in question has experienced transactions within the past half-year. Over the latest six-month time frame, HMS Holdings Corp. (NASDAQ:HMSY) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to HMS Holdings Corp. (NASDAQ:HMSY). These stocks are Deluxe Corporation (NYSE:DLX), Portfolio Recovery Associates, Inc. (NASDAQ:PRAA), Lender Processing Services, Inc. (NYSE:LPS), RR Donnelley & Sons Co (NASDAQ:RRD), and Ritchie Bros. Auctioneers (USA) (NYSE:RBA). All of these stocks are in the business services industry and their market caps match HMSY’s market cap.

Using the returns explained by the previously mentioned tactics, regular investors should always track hedge fund and insider trading sentiment, and HMS Holdings Corp. (NASDAQ:HMSY) is an important part of this process.

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