In this article we will take a look at whether hedge funds think MAXIMUS, Inc. (NYSE:MMS) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
MAXIMUS, Inc. (NYSE:MMS) has seen a decrease in hedge fund sentiment recently. MAXIMUS, Inc. (NYSE:MMS) was in 18 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 26. Our calculations also showed that MMS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Joel Greenblatt of Gotham Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to take a gander at the latest hedge fund action surrounding MAXIMUS, Inc. (NYSE:MMS).
Do Hedge Funds Think MMS Is A Good Stock To Buy Now?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in MMS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the most valuable position in MAXIMUS, Inc. (NYSE:MMS), worth close to $20.1 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, with a $18.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism comprise Michael O’Keefe’s 12th Street Asset Management, Ken Griffin’s Citadel Investment Group and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to MAXIMUS, Inc. (NYSE:MMS), around 2.9% of its 13F portfolio. Running Oak Capital is also relatively very bullish on the stock, setting aside 1.85 percent of its 13F equity portfolio to MMS.
Due to the fact that MAXIMUS, Inc. (NYSE:MMS) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of funds who were dropping their entire stakes heading into Q2. It’s worth mentioning that Greg Eisner’s Engineers Gate Manager cut the biggest investment of all the hedgies monitored by Insider Monkey, worth an estimated $4.2 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $3.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds heading into Q2.
Let’s check out hedge fund activity in other stocks similar to MAXIMUS, Inc. (NYSE:MMS). We will take a look at Braskem SA (NYSE:BAK), Glacier Bancorp, Inc. (NASDAQ:GBCI), Enstar Group Ltd. (NASDAQ:ESGR), Nikola Corporation (NASDAQ:NKLA), Intellia Therapeutics, Inc. (NASDAQ:NTLA), Manpowergroup Inc (NYSE:MAN), and Crocs, Inc. (NASDAQ:CROX). This group of stocks’ market valuations are similar to MMS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BAK | 8 | 29378 | 0 |
| GBCI | 16 | 66851 | 5 |
| ESGR | 11 | 504821 | 0 |
| NKLA | 19 | 337442 | 1 |
| NTLA | 29 | 1139388 | -1 |
| MAN | 26 | 263197 | -5 |
| CROX | 31 | 699853 | -10 |
| Average | 20 | 434419 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $434 million. That figure was $116 million in MMS’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Braskem SA (NYSE:BAK) is the least popular one with only 8 bullish hedge fund positions. MAXIMUS, Inc. (NYSE:MMS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MMS is 41.5. 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 negative signal and 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately MMS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); MMS investors were disappointed as the stock returned -0.2% since the end of March (through 7/23) 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 most of these stocks already outperformed the market in 2021.
Follow Maximus Inc. (NYSE:MMS)
Follow Maximus Inc. (NYSE:MMS)
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Disclosure: None. This article was originally published at Insider Monkey.
