The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Medpace Holdings, Inc. (NASDAQ:MEDP).
Is MEDP a good stock to buy now? Investors who are in the know were becoming hopeful. The number of bullish hedge fund positions rose by 9 recently. Medpace Holdings, Inc. (NASDAQ:MEDP) was in 31 hedge funds' portfolios at the end of September. The all time high for this statistic is 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MEDP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 22 hedge funds in our database with MEDP holdings at the end of June. Video: 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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's view the recent hedge fund action regarding Medpace Holdings, Inc. (NASDAQ:MEDP).
Do Hedge Funds Think MEDP Is A Good Stock To Buy Now?
At third quarter's end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in MEDP a year ago. With the smart money's capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Medpace Holdings, Inc. (NASDAQ:MEDP) was held by Renaissance Technologies, which reported holding $93.7 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $34.2 million position. Other investors bullish on the company included GLG Partners, D E Shaw, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to Medpace Holdings, Inc. (NASDAQ:MEDP), around 0.6% of its 13F portfolio. Shanda Asset Management is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to MEDP.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Select Equity Group, managed by Robert Joseph Caruso, assembled the largest position in Medpace Holdings, Inc. (NASDAQ:MEDP). Select Equity Group had $20.9 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $13.4 million position during the quarter. The other funds with brand new MEDP positions are Michael Gelband's ExodusPoint Capital, Greg Eisner's Engineers Gate Manager, and Benjamin A. Smith's Laurion Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Medpace Holdings, Inc. (NASDAQ:MEDP). We will take a look at Healthequity Inc (NASDAQ:HQY), YETI Holdings, Inc. (NYSE:YETI), Cirrus Logic, Inc. (NASDAQ:CRUS), First Financial Bankshares Inc (NASDAQ:FFIN), Envista Holdings Corporation (NYSE:NVST), Nextera Energy Partners LP (NYSE:NEP), and Graphic Packaging Holding Company (NYSE:GPK). This group of stocks' market caps are similar to MEDP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HQY,24,225566,6 YETI,29,121199,7 CRUS,26,357380,-7 FFIN,17,26509,-1 NVST,20,417907,-1 NEP,22,217720,1 GPK,30,311941,-2 Average,24,239746,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $240 million. That figure was $310 million in MEDP's case. Graphic Packaging Holding Company (NYSE:GPK) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Medpace Holdings, Inc. (NASDAQ:MEDP) is more popular among hedge funds. Our overall hedge fund sentiment score for MEDP is 90. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on MEDP as the stock returned 25.4% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.