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 MacroGenics Inc (NASDAQ:MGNX) and determine whether the smart money was really smart about this stock.
Is MacroGenics Inc (NASDAQ:MGNX) an excellent investment today? Hedge funds were betting on the stock. The number of long hedge fund bets improved by 5 lately. MacroGenics Inc (NASDAQ:MGNX) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistics is 23. Our calculations also showed that MGNX 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). There were 16 hedge funds in our database with MGNX holdings at the end of March.
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 junior gold mining stock. We are also checking out this lithium company which could 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. With all of this in mind let’s go over the key hedge fund action encompassing MacroGenics Inc (NASDAQ:MGNX).
How have hedgies been trading MacroGenics Inc (NASDAQ:MGNX)?
Heading into the third quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 31% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MGNX over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, RA Capital Management was the largest shareholder of MacroGenics Inc (NASDAQ:MGNX), with a stake worth $128 million reported as of the end of September. Trailing RA Capital Management was Consonance Capital Management, which amassed a stake valued at $112.8 million. Great Point Partners, Point72 Asset Management, and Perceptive 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 Consonance Capital Management allocated the biggest weight to MacroGenics Inc (NASDAQ:MGNX), around 6.76% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, designating 3.35 percent of its 13F equity portfolio to MGNX.
Consequently, specific money managers have jumped into MacroGenics Inc (NASDAQ:MGNX) headfirst. RA Capital Management, managed by Peter Kolchinsky, established the most valuable position in MacroGenics Inc (NASDAQ:MGNX). RA Capital Management had $128 million invested in the company at the end of the quarter. Mitchell Blutt’s Consonance Capital Management also made a $112.8 million investment in the stock during the quarter. The following funds were also among the new MGNX investors: Jeffrey Jay and David Kroin’s Great Point Partners, Joseph Edelman’s Perceptive Advisors, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s check out hedge fund activity in other stocks similar to MacroGenics Inc (NASDAQ:MGNX). These stocks are 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), NMI Holdings Inc (NASDAQ:NMIH), and WesBanco, Inc. (NASDAQ:WSBC). All of these stocks’ market caps are similar to MGNX’s market cap.
|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 18 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $505 million in MGNX’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. MacroGenics Inc (NASDAQ:MGNX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MGNX is 66. 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 MGNX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MGNX were disappointed as the stock returned -9.8% 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.