The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Seattle Genetics, Inc. (NASDAQ:SGEN).
Seattle Genetics, Inc. (NASDAQ:SGEN) was in 27 hedge funds’ portfolios at the end of the first quarter of 2020. SGEN has seen a decrease in activity from the world’s largest hedge funds lately. There were 36 hedge funds in our database with SGEN holdings at the end of the previous quarter. Our calculations also showed that SGEN 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the key hedge fund action surrounding Seattle Genetics, Inc. (NASDAQ:SGEN).
How have hedgies been trading Seattle Genetics, Inc. (NASDAQ:SGEN)?
At Q1’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SGEN over the last 18 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Baker Bros. Advisors held the most valuable stake in Seattle Genetics, Inc. (NASDAQ:SGEN), which was worth $5776 million at the end of the third quarter. On the second spot was Redmile Group which amassed $75.7 million worth of shares. Samlyn Capital, Woodline Partners, and Holocene Advisors 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 Baker Bros. Advisors allocated the biggest weight to Seattle Genetics, Inc. (NASDAQ:SGEN), around 35.57% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, earmarking 3 percent of its 13F equity portfolio to SGEN.
Due to the fact that Seattle Genetics, Inc. (NASDAQ:SGEN) has witnessed bearish sentiment from hedge fund managers, we can see that there was a specific group of fund managers who sold off their entire stakes in the first quarter. It’s worth mentioning that David Goel and Paul Ferri’s Matrix Capital Management dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $182.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund cut about $4.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 9 funds in the first quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Seattle Genetics, Inc. (NASDAQ:SGEN). These stocks are AutoZone, Inc. (NYSE:AZO), PPG Industries, Inc. (NYSE:PPG), Credit Suisse Group AG (NYSE:CS), and Fresenius Medical Care AG & Co. KGaA (NYSE:FMS). This group of stocks’ market values match SGEN’s market value.
|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 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $475 million. That figure was $6154 million in SGEN’s case. AutoZone, Inc. (NYSE:AZO) is the most popular stock in this table. On the other hand Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the least popular one with only 10 bullish hedge fund positions. Seattle Genetics, Inc. (NASDAQ:SGEN) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on SGEN as the stock returned 36.3% in Q2 (through the end of May) 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.