Do Hedge Funds Love Applied Genetic Technologies Corp (AGTC)?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Applied Genetic Technologies Corp (NASDAQ:AGTC).

Applied Genetic Technologies Corp (NASDAQ:AGTC) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. AGTC was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 12 hedge funds in our database with AGTC positions at the end of the previous quarter. At the end of this article we will also compare AGTC to other stocks, including Cascade Microtech, Inc. (NASDAQ:CSCD), Franklin Financial Network Inc (NYSE:FSB), and DURECT Corporation (NASDAQ:DRRX) to get a better sense of its popularity.

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In the eyes of most shareholders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are more than 8000 funds trading today, Our researchers hone in on the masters of this group, around 700 funds. These hedge fund managers watch over the lion’s share of all hedge funds’ total asset base, and by following their top picks, Insider Monkey has determined a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to go over the latest action regarding Applied Genetic Technologies Corp (NASDAQ:AGTC).

How are hedge funds trading Applied Genetic Technologies Corp (NASDAQ:AGTC)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the most valuable position in Applied Genetic Technologies Corp (NASDAQ:AGTC). Point72 Asset Management has an $13.1 million position in the stock, comprising 0.1% of its 13F portfolio. On Point72 Asset Management’s heels is Visium Asset Management, led by Jacob Gottlieb, holding an $12.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Joseph Edelman’s Perceptive Advisors, Israel Englander’s Millennium Management and Nathan Fischel’s DAFNA Capital Management.

Seeing as Applied Genetic Technologies Corp (NASDAQ:AGTC) has experienced a drop in interest from hedge fund managers, we can see that there lies a certain “tier” of fund managers that slashed their entire stakes last quarter. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp cut the biggest investment of the “upper crust” of funds watched by Insider Monkey, valued at about $0.2 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also said goodbye to its stock, about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Applied Genetic Technologies Corp (NASDAQ:AGTC). These stocks are Cascade Microtech, Inc. (NASDAQ:CSCD), Franklin Financial Network Inc (NYSE:FSB), DURECT Corporation (NASDAQ:DRRX), and Bluerock Residential Growth REIT Inc (NYSEMKT:BRG). All of these stocks’ market caps are similar to AGTC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CSCD 5 24994 -2
FSB 4 15973 -2
DRRX 11 56578 1
BRG 12 22940 -1

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $30 million, versus $43 million in AGTC’s case. Bluerock Residential Growth REIT Inc (NYSEMKT:BRG) is the most popular stock in this table, while Franklin Financial Network Inc (NYSE:FSB) is the least popular one with only 4 bullish hedge fund positions. Applied Genetic Technologies Corp (NASDAQ:AGTC) 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. In this regard BRG might be a better candidate to consider a long position.