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Is MEDP Stock A Buy or Sell?

In this article we will take a look at whether hedge funds think Medpace Holdings, Inc. (NASDAQ:MEDP) 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.

Is MEDP stock a buy? Medpace Holdings, Inc. (NASDAQ:MEDP) has experienced a decrease in hedge fund sentiment of late. Medpace Holdings, Inc. (NASDAQ:MEDP) was in 25 hedge funds' portfolios at the end of December. The all time high for this statistic is 31. Our calculations also showed that MEDP isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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. Hedge funds have more than $3 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.


Cliff Asness of AQR Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Keeping this in mind we're going to take a gander at the fresh hedge fund action surrounding Medpace Holdings, Inc. (NASDAQ:MEDP).

Do Hedge Funds Think MEDP Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in MEDP a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Medpace Holdings, Inc. (NASDAQ:MEDP), with a stake worth $84 million reported as of the end of December. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $41.2 million. GLG Partners, Arrowstreet Capital, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Matarin Capital allocated the biggest weight to Medpace Holdings, Inc. (NASDAQ:MEDP), around 0.75% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, designating 0.48 percent of its 13F equity portfolio to MEDP.

Because Medpace Holdings, Inc. (NASDAQ:MEDP) has witnessed a decline in interest from the smart money, it's easy to see that there was a specific group of hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Robert Joseph Caruso's Select Equity Group dumped the largest position of the "upper crust" of funds watched by Insider Monkey, worth about $20.9 million in stock. Michael Gelband's fund, ExodusPoint Capital, also sold off its stock, about $3.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Medpace Holdings, Inc. (NASDAQ:MEDP) but similarly valued. These stocks are Cousins Properties Incorporated (NYSE:CUZ), Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR), The Descartes Systems Group Inc (NASDAQ:DSGX), TFS Financial Corporation (NASDAQ:TFSL), Owl Rock Capital Corporation (NYSE:ORCC), Mercury Systems Inc (NASDAQ:MRCY), and Ultrapar Participacoes SA (NYSE:UGP). All of these stocks' market caps resemble MEDP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CUZ,16,52738,3 ASR,10,63126,0 DSGX,12,248616,0 TFSL,10,136574,1 ORCC,20,277015,5 MRCY,10,50331,-9 UGP,8,37931,0 Average,12.3,123762,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $248 million in MEDP's case. Owl Rock Capital Corporation (NYSE:ORCC) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 8 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 73.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on MEDP as the stock returned 29.7% since the end of December (through 4/19) 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.

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