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Did Hedge Funds Make The Right Call On Immunovant, Inc. (IMVT) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Immunovant, Inc. (NASDAQ:IMVT) based on that data and determine whether they were really smart about the stock.

Is Immunovant, Inc. (NASDAQ:IMVT) undervalued? The best stock pickers were turning bullish. The number of long hedge fund bets advanced by 6 in recent months. Our calculations also showed that IMVT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are several tools investors use to size up publicly traded companies. A duo of the less known tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outperform their index-focused peers by a very impressive margin (see the details here).

Samuel Isaly Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the key hedge fund action regarding Immunovant, Inc. (NASDAQ:IMVT).

Hedge fund activity in Immunovant, Inc. (NASDAQ:IMVT)

At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in IMVT a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Is IMVT A Good Stock To Buy?

More specifically, Cormorant Asset Management was the largest shareholder of Immunovant, Inc. (NASDAQ:IMVT), with a stake worth $19.4 million reported as of the end of September. Trailing Cormorant Asset Management was Adage Capital Management, which amassed a stake valued at $15.9 million. Biotechnology Value Fund / BVF Inc, Ikarian Capital, and Ghost Tree 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 Ghost Tree Capital allocated the biggest weight to Immunovant, Inc. (NASDAQ:IMVT), around 2.93% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, designating 1.45 percent of its 13F equity portfolio to IMVT.

Now, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, created the biggest position in Immunovant, Inc. (NASDAQ:IMVT). Millennium Management had $7.1 million invested in the company at the end of the quarter. Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management also made a $3.9 million investment in the stock during the quarter. The following funds were also among the new IMVT investors: Samuel Isaly’s OrbiMed Advisors, Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund, and Michael Castor’s Sio Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Immunovant, Inc. (NASDAQ:IMVT) but similarly valued. We will take a look at Spirit Airlines Incorporated (NASDAQ:SAVE), Black Diamond Therapeutics, Inc. (NASDAQ:BDTX), U.S. Physical Therapy, Inc. (NYSE:USPH), and Hertz Global Holdings, Inc. (NYSE:HTZ). This group of stocks’ market values are similar to IMVT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAVE 28 86042 -9
BDTX 13 162606 13
USPH 12 33325 -4
HTZ 24 515179 -9
Average 19.25 199288 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $199 million. That figure was $146 million in IMVT’s case. Spirit Airlines Incorporated (NASDAQ:SAVE) is the most popular stock in this table. On the other hand U.S. Physical Therapy, Inc. (NYSE:USPH) is the least popular one with only 12 bullish hedge fund positions. Immunovant, Inc. (NASDAQ:IMVT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on IMVT as the stock returned 56.4% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.