To The Moon

$Medpace(MEDP)$

Medpace Holdings (NASDAQ: MEDP) has delivered an extraordinary return of over 130%. The most recent surge—an astonishing 50% in a single day—has caught the attention of both seasoned investors and newcomers alike. While such outsized one-day moves are typically reserved for high-risk meme stocks or buyout targets, Medpace's advance was different: grounded in fundamentals and driven by an unexpectedly strong earnings report.

This dramatic move serves not only as a milestone for the stock itself but as a broader case study in conviction-based investing, long-term discipline, and navigating market irrationality. Below, I outline the strategic thesis, valuation considerations, market dynamics, and investment lessons drawn from my multi-year holding of Medpace.

Background: A High-Conviction Fast-Growth Pick

My initial purchase of Medpace occurred in May 2023, which focuses on strategic entry points into high-quality businesses with strong secular or cyclical tailwinds. At the time, Medpace was a relatively underappreciated name in the life sciences services space, with a market capitalization of just $4 billion. The company exhibited consistent double-digit earnings growth—upwards of 50% in the prior year—and traded at a forward P/E of approximately 20 to 25x, an attractive valuation considering the quality and growth trajectory.

This investment fell under my “fast-growth strategy,” which targets younger, scalable businesses with superior earnings acceleration. Given Medpace’s profile and robust fundamentals, it fit that model well. The thesis was straightforward: strong earnings growth, a fair multiple, and a long runway for expansion in clinical research services.

Discipline Over Timing: The Buy-and-Hold Philosophy

Although the stock doubled within the first year, eventually commanding a lofty P/E ratio of 40x at its peak in 2024, I resisted the temptation to sell. Many investors exited around this valuation, citing multiple compression risks. However, as a long-term investor, I adhered to a disciplined buy-and-hold philosophy. While valuations matter, earnings momentum and business durability were the driving factors in my decision-making process.

Rather than reacting to every valuation swing, I remained anchored to the underlying thesis. Medpace’s growth remained intact, its margins healthy, and its operational execution consistent. When the stock later corrected, I saw this not as a failure of the investment but as an opportunity to reassess and reengage.

Public Thesis Reinforced: Revisiting in January 2025

In early 2025, as Medpace’s valuation normalized and sentiment waned, I made the stock a Weekly Pick and published an article on Seeking Alpha reinforcing its long-term attractiveness. At the time, Medpace had pulled back from its highs and traded near technical and psychological support levels.

In that article, I rated the stock a "Hold" at the prevailing price, citing strong fundamentals but a need for greater margin of safety. I noted that if the stock declined below $279, it would trigger a buy based on my valuation framework. Serendipitously, the stock did dip to $278.12 on April 4th—hitting my outlined buy threshold almost precisely. Some investors who followed that guidance have since reported capturing the bottom tick.

Reaping the Rewards: Patience Pays Off

Those who bought at or near the $278 mark have since enjoyed exceptional gains. More importantly, this validates the importance of a consistent investment framework. Even though Medpace underperformed for several months and newer investors were temporarily underwater (the January pick was down ~12% at one point), adhering to a structured strategy and exercising patience proved rewarding.

This reinforces a core principle of long-term investing: the willingness to absorb near-term volatility in exchange for potentially outsized long-term gains. Investors who exited early, influenced by temporary pessimism or short-term price action, may now regret their decisions. Timing the market rarely works as well as trusting a well-thought-out thesis.

Understanding the 50% Daily Move: Fundamentals Meet a Short Squeeze

While Medpace's sharp earnings beat catalyzed the recent rally, the magnitude of the move was amplified by technical market dynamics—namely, short interest. At the time of the report, Medpace had an estimated 11% short interest, which, for a company with a modest ~$6 billion market cap, is significant. The stock's low trading volume and small float made it particularly vulnerable to a short squeeze.

In this instance, it appears short sellers were caught off guard, possibly overleveraged, and were forced to cover aggressively in both after-hours and regular trading sessions. The result was a runaway rally as buy-side demand overwhelmed available supply. These dynamics are not uncommon in today's market environment, where speculative behavior and leveraged positions can create outsized moves—both up and down.

Strategic Lessons: Market Inefficiency and Investor Behavior

Medpace’s trajectory provides broader insight into investor psychology, market inefficiency, and the value of strategic patience. At various points over the past year, the stock fell sharply not due to operational underperformance, but rather due to external market factors—political uncertainty in healthcare, macroeconomic headwinds, and overall risk aversion in life sciences equities.

This environment attracted short-sellers and discouraged investors focused on short-term momentum. However, none of these factors altered the long-term value proposition of the business. This is precisely where disciplined investors can gain an edge—by buying when others are fearful and maintaining conviction through noise.

Investors who lacked a clear strategy or appropriate position sizing may have panicked or exited prematurely. Conversely, those with a well-defined process—including predetermined buy zones and an understanding of the business model—were positioned to benefit from a reversal.

Why Strategy Matters More Than Speculation

One of the key takeaways here is the importance of understanding your own investment strategy and sticking to it. If a single position makes you uncomfortable due to volatility, the problem likely lies in your position sizing or a lack of conviction in the underlying thesis—not in the market itself.

For me, Medpace was never a trade. It was a multi-year bet on secular growth in clinical trial services. Once I placed that bet, my intent was to let the thesis mature. The recent price action, while extreme, is simply a reflection of the market eventually catching up to the company's improving fundamentals.

Market Speculation: Broader Implications for Portfolio Management

The recent move in Medpace also underscores an important macro-level trend—there are growing pockets of speculation in today’s equity markets. Highly shorted names, low-float stocks, and levered trades are becoming increasingly common, and not always backed by fundamentals.

This environment creates both risk and opportunity. For example, Opendoor and other so-called meme stocks have surged irrationally. While Medpace’s move was rooted in fundamentals, the velocity of its price action mirrored some of these speculative names. That’s a cautionary signal for investors to ensure they are grounded in valuation and long-term business analysis—not just chasing momentum.

Final Thoughts and Strategic Takeaways

Medpace’s performance is a powerful reminder that long-term investing is as much about patience and discipline as it is about selecting quality businesses. Market timing, short-term sentiment, and speculative forces can obscure value in the near term—but over time, fundamentals tend to prevail.

This episode reinforces several key principles:

1. Think independently – Avoid letting market sentiment dictate your investment thesis.

2. Have a strategy – Whether it’s fast-growth, dividend growth, or deep value, a strategy helps navigate volatility.

3. Position sizing matters – If you're uncomfortable with a holding, reduce exposure rather than abandon your thesis.

4. Stay informed but not reactive – Fundamentals drive long-term returns; headlines rarely do.

5. Use volatility as opportunity – Short-term dislocations are where the best entries often occur.

Verdict: Entry Price August 2025 — Hold With Upside Potential

With the stock now significantly higher, Medpace is no longer trading at deep value levels. However, its growth trajectory and earnings revisions suggest further upside potential—albeit with higher volatility risk. Investors who entered near the $278 level should strongly consider holding. New investors should await a more favorable entry point or initiate a partial position with a long-term horizon.

In short: Hold for existing investors; Wait for pullbacks before initiating new positions.