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In this article we will take a look at whether hedge funds think Molina Healthcare, Inc. (NYSE:MOH) 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 MOH stock a buy? Molina Healthcare, Inc. (NYSE:MOH) has seen a decrease in hedge fund interest recently. Molina Healthcare, Inc. (NYSE:MOH) was in 27 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. There were 35 hedge funds in our database with MOH holdings at the end of September. Our calculations also showed that MOH isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Andreas Halvorsen of Viking Global
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. Now let's go over the latest hedge fund action surrounding Molina Healthcare, Inc. (NYSE:MOH).
Do Hedge Funds Think MOH Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the third quarter of 2020. On the other hand, there were a total of 35 hedge funds with a bullish position in MOH a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Molina Healthcare, Inc. (NYSE:MOH), which was worth $659.4 million at the end of the fourth quarter. On the second spot was Viking Global which amassed $217.5 million worth of shares. Iridian Asset Management, AQR Capital Management, and Polar Capital 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 Iron Triangle Partners allocated the biggest weight to Molina Healthcare, Inc. (NYSE:MOH), around 4.14% of its 13F portfolio. Sivik Global Healthcare is also relatively very bullish on the stock, earmarking 2.82 percent of its 13F equity portfolio to MOH.
Because Molina Healthcare, Inc. (NYSE:MOH) has witnessed declining sentiment from hedge fund managers, it's easy to see that there exists a select few hedgies who sold off their entire stakes last quarter. It's worth mentioning that Michael Rockefeller and Karl Kroeker's Woodline Partners dumped the biggest position of the "upper crust" of funds watched by Insider Monkey, worth about $14.7 million in stock. Principal Global Investors's fund, Columbus Circle Investors, also sold off its stock, about $8.8 million worth. These moves are interesting, as total hedge fund interest was cut by 8 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Molina Healthcare, Inc. (NYSE:MOH). These stocks are Evergy, Inc. (NYSE:EVRG), Nuance Communications Inc. (NASDAQ:NUAN), Enel Americas S.A. (NYSE:ENIA), ASE Technology Holding Co., Ltd. (NYSE:ASX), Charles River Laboratories International Inc. (NYSE:CRL), ContextLogic Inc. (NASDAQ:WISH), and Open Text Corporation (NASDAQ:OTEX). All of these stocks' market caps resemble MOH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVRG,33,1403512,-4 NUAN,60,4678042,15 ENIA,9,91500,-2 ASX,9,183415,-2 CRL,43,1187297,7 WISH,24,348110,23 OTEX,18,234136,-1 Average,28,1160859,5.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1161 million. That figure was $1385 million in MOH's case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 9 bullish hedge fund positions. Molina Healthcare, Inc. (NYSE:MOH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MOH is 37.8. 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 gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on MOH as the stock returned 19.7% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.