Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Medpace Holdings, Inc. (NASDAQ:MEDP)? The smart money sentiment can provide an answer to this question.
Is Medpace Holdings, Inc. (NASDAQ:MEDP) the right investment to pursue these days? Money managers are buying. The number of long hedge fund bets rose by 5 recently. 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 below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a large number of tools stock traders use to grade publicly traded companies. Two of the most innovative tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top fund managers can outperform the broader indices by a superb margin (see the details here).
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman of GLG Partners[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a glance at the latest hedge fund action encompassing Medpace Holdings, Inc. (NASDAQ:MEDP).
How have hedgies been trading Medpace Holdings, Inc. (NASDAQ:MEDP)?
Heading into the fourth quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2019. By comparison, 26 hedge funds held shares or bullish call options 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the largest position in Medpace Holdings, Inc. (NASDAQ:MEDP). Renaissance Technologies has a $39.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $25.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include David E. Shaw's D E Shaw, Cliff Asness's AQR Capital Management and Noam Gottesman's GLG Partners. In terms of the portfolio weights assigned to each position Sio Capital allocated the biggest weight to Medpace Holdings, Inc. (NASDAQ:MEDP), around 1.39% of its 13F portfolio. Prescott Group Capital Management is also relatively very bullish on the stock, earmarking 0.39 percent of its 13F equity portfolio to MEDP.
Consequently, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, established the biggest position in Medpace Holdings, Inc. (NASDAQ:MEDP). Millennium Management had $7.3 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $5.6 million position during the quarter. The following funds were also among the new MEDP investors: Richard Driehaus's Driehaus Capital, Phil Frohlich's Prescott Group Capital Management, and Joseph Edelman's Perceptive Advisors.
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 FS KKR Capital Corp. (NYSE:FSK), Omnicell, Inc. (NASDAQ:OMCL), HMS Holdings Corp. (NASDAQ:HMSY), and Energizer Holdings, Inc. (NYSE:ENR). This group of stocks' market caps match MEDP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSK,22,211845,6 OMCL,11,102788,-7 HMSY,21,126466,0 ENR,17,214912,0 Average,17.75,164003,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $164 million. That figure was $178 million in MEDP's case. FS KKR Capital Corp. (NYSE:FSK) is the most popular stock in this table. On the other hand Omnicell, Inc. (NASDAQ:OMCL) is the least popular one with only 11 bullish hedge fund positions. Medpace Holdings, Inc. (NASDAQ:MEDP) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately MEDP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MEDP were disappointed as the stock returned -8.8% during the fourth quarter (through the end of November) 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.