Do Hedge Funds Love argenx SE (ARGX)?

“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards argenx SE (NASDAQ:ARGX).

argenx SE (NASDAQ:ARGX) was in 34 hedge funds’ portfolios at the end of September. ARGX investors should be aware of an increase in hedge fund interest of late. There were 23 hedge funds in our database with ARGX holdings at the end of the previous quarter. Our calculations also showed that argx isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Samuel Isaly Orbimed Advisors

We’re going to take a peek at the fresh hedge fund action surrounding argenx SE (NASDAQ:ARGX).

What does the smart money think about argenx SE (NASDAQ:ARGX)?

Heading into the fourth quarter of 2018, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 48% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in ARGX heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

No of Hedge Funds with ARGX Positions

When looking at the institutional investors followed by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the biggest position in argenx SE (NASDAQ:ARGX), worth close to $77.3 million, accounting for 0.5% of its total 13F portfolio. On Baker Bros. Advisors’s heels is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $77.1 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism encompass Jeremy Green’s Redmile Group, Behzad Aghazadeh’s venBio Select Advisor and Samuel Isaly’s OrbiMed Advisors.

Now, key money managers have jumped into argenx SE (NASDAQ:ARGX) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, assembled the most valuable position in argenx SE (NASDAQ:ARGX). Laurion Capital Management had $10.7 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin’s Great Point Partners also made a $9.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Alec Litowitz and Ross Laser’s Magnetar Capital, Mark Lampert’s Biotechnology Value Fund / BVF Inc, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Let’s go over hedge fund activity in other stocks similar to argenx SE (NASDAQ:ARGX). These stocks are DSW Inc. (NYSE:DSW), First Interstate Bancsystem Inc (NASDAQ:FIBK), Oceaneering International, Inc. (NYSE:OII), and Simmons First National Corporation (NASDAQ:SFNC). All of these stocks’ market caps are similar to ARGX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DSW 27 277884 4
FIBK 12 64678 1
OII 12 226349 -5
SFNC 9 5177 -1
Average 15 143522 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $612 million in ARGX’s case. DSW Inc. (NYSE:DSW) is the most popular stock in this table. On the other hand Simmons First National Corporation (NASDAQ:SFNC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks argenx SE (NASDAQ:ARGX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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