Hedge Funds Are Coming Back To Athenex, Inc. (ATNX)

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. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Athenex, Inc. (NASDAQ:ATNX) and determine whether the smart money was really smart about this stock.

Athenex, Inc. (NASDAQ:ATNX) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ATNX investors should be aware of an increase in enthusiasm from smart money of late. There were 15 hedge funds in our database with ATNX positions at the end of the first quarter. Our calculations also showed that ATNX 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.

Samuel Isaly Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

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 real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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. Keeping this in mind let’s view the key hedge fund action surrounding Athenex, Inc. (NASDAQ:ATNX).

What does smart money think about Athenex, Inc. (NASDAQ:ATNX)?

At the end of June, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ATNX over the last 20 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Among these funds, Perceptive Advisors held the most valuable stake in Athenex, Inc. (NASDAQ:ATNX), which was worth $155.9 million at the end of the third quarter. On the second spot was OrbiMed Advisors which amassed $55.2 million worth of shares. Avoro Capital Advisors (venBio Select Advisor), Kingdon Capital, and Millennium Management 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 Kingdon Capital allocated the biggest weight to Athenex, Inc. (NASDAQ:ATNX), around 4.65% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, designating 2.53 percent of its 13F equity portfolio to ATNX.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Palo Alto Investors, managed by William Leland Edwards, created the most outsized position in Athenex, Inc. (NASDAQ:ATNX). Palo Alto Investors had $2.5 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $1.9 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Parvinder Thiara’s Athanor Capital, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Athenex, Inc. (NASDAQ:ATNX) but similarly valued. These stocks are Acadia Realty Trust (NYSE:AKR), K12 Inc. (NYSE:LRN), Cadence Bancorporation (NYSE:CADE), Pliant Therapeutics, Inc. (NASDAQ:PLRX), The RealReal, Inc. (NASDAQ:REAL), Calavo Growers, Inc. (NASDAQ:CVGW), and SFL Corporation Ltd. (NYSE:SFL). This group of stocks’ market valuations match ATNX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKR 16 49134 2
LRN 18 157534 -2
CADE 21 109996 -8
PLRX 13 241772 13
REAL 19 201408 4
CVGW 14 78053 3
SFL 15 41362 1
Average 16.6 125608 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $337 million in ATNX’s case. Cadence Bancorporation (NYSE:CADE) is the most popular stock in this table. On the other hand Pliant Therapeutics, Inc. (NASDAQ:PLRX) is the least popular one with only 13 bullish hedge fund positions. Athenex, Inc. (NASDAQ:ATNX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATNX is 69.3. 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 ATNX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ATNX were disappointed as the stock returned -12.1% 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.

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