We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Regenxbio Inc (NASDAQ:RGNX) and determine whether hedge funds skillfully traded this stock.
Regenxbio Inc (NASDAQ:RGNX) has experienced an increase in enthusiasm from smart money recently. Regenxbio Inc (NASDAQ:RGNX) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistics is 24. Our calculations also showed that RGNX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Now let’s take a look at the latest hedge fund action encompassing Regenxbio Inc (NASDAQ:RGNX).
What does smart money think about Regenxbio Inc (NASDAQ:RGNX)?
At the end of the second quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the first quarter of 2020. On the other hand, there were a total of 14 hedge funds with a bullish position in RGNX a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Redmile Group was the largest shareholder of Regenxbio Inc (NASDAQ:RGNX), with a stake worth $82.4 million reported as of the end of September. Trailing Redmile Group was Aquilo Capital Management, which amassed a stake valued at $20.4 million. Hillhouse Capital Management, Water Street Capital, and Sonic 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 Sonic Capital allocated the biggest weight to Regenxbio Inc (NASDAQ:RGNX), around 7.62% of its 13F portfolio. Aquilo Capital Management is also relatively very bullish on the stock, earmarking 4.11 percent of its 13F equity portfolio to RGNX.
Consequently, some big names have jumped into Regenxbio Inc (NASDAQ:RGNX) headfirst. Point72 Asset Management, managed by Steve Cohen, created the largest position in Regenxbio Inc (NASDAQ:RGNX). Point72 Asset Management had $6.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $5.7 million investment in the stock during the quarter. The other funds with brand new RGNX positions are Noam Gottesman’s GLG Partners, Michael Gelband’s ExodusPoint Capital, and Peter Muller’s PDT Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Regenxbio Inc (NASDAQ:RGNX) but similarly valued. We will take a look at MacroGenics Inc (NASDAQ:MGNX), Sonic Automotive Inc (NYSE:SAH), CSG Systems International, Inc. (NASDAQ:CSGS), TowneBank (NASDAQ:TOWN), Essential Properties Realty Trust, Inc. (NYSE:EPRT), Navient Corp (NASDAQ:NAVI), and NMI Holdings Inc (NASDAQ:NMIH). This group of stocks’ market valuations are similar to RGNX’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $200 million in RGNX’s case. NMI Holdings Inc (NASDAQ:NMIH) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 9 bullish hedge fund positions. Regenxbio Inc (NASDAQ:RGNX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGNX is 71.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately RGNX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on RGNX were disappointed as the stock returned -25.3% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.