A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Molina Healthcare, Inc. (NYSE:MOH).
Is Molina Healthcare, Inc. (NYSE:MOH) a bargain? Prominent investors are in a bullish mood. The number of long hedge fund bets inched up by 2 in recent months. Our calculations also showed that MOH isn't among the 30 most popular stocks among hedge funds (see the video below). MOH was in 32 hedge funds' portfolios at the end of June. There were 30 hedge funds in our database with MOH positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's go over the recent hedge fund action encompassing Molina Healthcare, Inc. (NYSE:MOH).
What does smart money think about Molina Healthcare, Inc. (NYSE:MOH)?
Heading into the third quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in MOH 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.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Molina Healthcare, Inc. (NYSE:MOH), worth close to $548.5 million, corresponding to 0.5% of its total 13F portfolio. The second largest stake is held by David Cohen and Harold Levy of Iridian Asset Management, with a $160.2 million position; 2.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish include Cliff Asness's AQR Capital Management, Christopher James's Partner Fund Management and Israel Englander's Millennium Management.
Consequently, key hedge funds were breaking ground themselves. Iridian Asset Management, managed by David Cohen and Harold Levy, assembled the biggest position in Molina Healthcare, Inc. (NYSE:MOH). Iridian Asset Management had $160.2 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $4.3 million position during the quarter. The following funds were also among the new MOH investors: Minhua Zhang's Weld Capital Management, Mike Vranos's Ellington, and Matthew Tewksbury's Stevens Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Molina Healthcare, Inc. (NYSE:MOH) but similarly valued. We will take a look at Santander Consumer USA Holdings Inc (NYSE:SC), Vereit Inc (NYSE:VER), Tapestry, Inc. (NYSE:TPR), and ASE Technology Holding Co., Ltd. (NYSE:ASX). This group of stocks' market caps are similar to MOH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SC,26,837468,4 VER,23,385560,2 TPR,32,533042,3 ASX,8,184028,-1 Average,22.25,485025,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $485 million. That figure was $1201 million in MOH's case. Tapestry, Inc. (NYSE:TPR) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Molina Healthcare, Inc. (NYSE:MOH) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MOH wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MOH were disappointed as the stock returned -23.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.