The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Zogenix, Inc. (NASDAQ:ZGNX).
Zogenix, Inc. (NASDAQ:ZGNX) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. ZGNX investors should be aware of a decrease in hedge fund sentiment recently. There were 30 hedge funds in our database with ZGNX holdings at the end of December. Our calculations also showed that ZGNX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Do Hedge Funds Think ZGNX Is A Good Stock To Buy Now?
At the end of March, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -30% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ZGNX over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, RA Capital Management, managed by Peter Kolchinsky, holds the number one position in Zogenix, Inc. (NASDAQ:ZGNX). RA Capital Management has a $103.1 million position in the stock, comprising 1.6% of its 13F portfolio. The second most bullish fund manager is Cadian Capital, managed by Eric Bannasch, which holds a $102.9 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions include Farallon Capital, Michael Rockefeller and KarláKroeker’s Woodline Partners and Roberto Mignone’s Bridger Management. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Zogenix, Inc. (NASDAQ:ZGNX), around 3.81% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 3.12 percent of its 13F equity portfolio to ZGNX.
Since Zogenix, Inc. (NASDAQ:ZGNX) has witnessed declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedge funds who were dropping their full holdings in the first quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest stake of all the hedgies watched by Insider Monkey, comprising an estimated $54.8 million in stock. Matt Sirovich and Jeremy Mindich’s fund, Scopia Capital, also sold off its stock, about $7.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 9 funds in the first quarter.
Let’s now review hedge fund activity in other stocks similar to Zogenix, Inc. (NASDAQ:ZGNX). These stocks are National Energy Services Reunited Corp. (NASDAQ:NESR), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Ideanomics, Inc. (NASDAQ:IDEX), Arcturus Therapeutics Holdings Inc. (NASDAQ:ARCT), Cara Therapeutics Inc (NASDAQ:CARA), Corecivic Inc. (NYSE:CXW), and Extreme Networks, Inc (NASDAQ:EXTR). This group of stocks’ market valuations match ZGNX’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 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $377 million in ZGNX’s case. Extreme Networks, Inc (NASDAQ:EXTR) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is the least popular one with only 7 bullish hedge fund positions. Zogenix, Inc. (NASDAQ:ZGNX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZGNX is 51.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately ZGNX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ZGNX were disappointed as the stock returned -13% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.