This Metric Says You Are Smart to Sell Medifast, Inc. (MED) – MarineMax, Inc. (HZO), Winmark Corporation (WINA)

Is Medifast, Inc. (NYSE:MED) a buy, sell, or hold? Prominent investors are in a pessimistic mood. The number of long hedge fund bets were cut by 1 lately.

In the 21st century investor’s toolkit, there are tons of metrics investors can use to watch stocks. A pair of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a solid amount (see just how much).

Equally as beneficial, optimistic insider trading sentiment is another way to break down the investments you’re interested in. Just as you’d expect, there are a variety of motivations for a corporate insider to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” know what to do (learn more here).

Keeping this in mind, it’s important to take a peek at the key action encompassing Medifast, Inc. (NYSE:MED).

How are hedge funds trading Medifast, Inc. (NYSE:MED)?

In preparation for this year, a total of 9 of the hedge funds we track were long in this stock, a change of -10% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the most valuable position in Medifast, Inc. (NYSE:MED), worth close to $11 million, accounting for 0% of its total 13F portfolio. Sitting at the No. 2 spot is AQR Capital Management, managed by Cliff Asness, which held a $4 million position; 0% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Robert B. Gillam’s McKinley Capital Management, Steven Cohen’s SAC Capital Advisors and Ken Griffin’s Citadel Investment Group.

Because Medifast, Inc. (NYSE:MED) has witnessed declining sentiment from hedge fund managers, we can see that there was a specific group of hedge funds that slashed their full holdings at the end of the year. At the top of the heap, Joel Greenblatt’s Gotham Asset Management said goodbye to the largest stake of the “upper crust” of funds we track, worth close to $1 million in stock.. D. E. Shaw’s fund, D E Shaw, also dumped its stock, about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds at the end of the year.

How are insiders trading Medifast, Inc. (NYSE:MED)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, Medifast, Inc. (NYSE:MED) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Medifast, Inc. (NYSE:MED). These stocks are West Marine, Inc. (NASDAQ:WMAR), TravelCenters of America LLC (NYSEAMEX:TA), MarineMax, Inc. (NYSE:HZO), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), and Winmark Corporation (NASDAQ:WINA). This group of stocks belong to the specialty retail, other industry and their market caps are similar to MED’s market cap.

With the results shown by the aforementioned tactics, everyday investors must always monitor hedge fund and insider trading sentiment, and Medifast, Inc. (NYSE:MED) is no exception.

Click here to learn why you should track hedge funds