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 Marinus Pharmaceuticals Inc (NASDAQ:MRNS) and determine whether hedge funds skillfully traded this stock.
Marinus Pharmaceuticals Inc (NASDAQ:MRNS) investors should be aware of an increase in hedge fund interest recently. Marinus Pharmaceuticals Inc (NASDAQ:MRNS) 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. Our calculations also showed that MRNS 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.
According to most market participants, hedge funds are seen as underperforming, old financial vehicles of the past. While there are over 8000 funds trading at present, We look at the elite of this group, approximately 850 funds. These investment experts command most of all hedge funds’ total capital, and by tracking their inimitable picks, Insider Monkey has revealed numerous investment strategies that have historically defeated Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
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How have hedgies been trading Marinus Pharmaceuticals Inc (NASDAQ:MRNS)?
At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 12 hedge funds with a bullish position in MRNS a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Avoro Capital Advisors (venBio Select Advisor) was the largest shareholder of Marinus Pharmaceuticals Inc (NASDAQ:MRNS), with a stake worth $30.4 million reported as of the end of September. Trailing Avoro Capital Advisors (venBio Select Advisor) was Lion Point, which amassed a stake valued at $27.6 million. Adage Capital Management, Alyeska Investment Group, and Granite Point 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 Lion Point allocated the biggest weight to Marinus Pharmaceuticals Inc (NASDAQ:MRNS), around 6.7% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, dishing out 0.6 percent of its 13F equity portfolio to MRNS.
As one would reasonably expect, specific money managers were breaking ground themselves. Suvretta Capital Management, managed by Aaron Cowen, established the most outsized position in Marinus Pharmaceuticals Inc (NASDAQ:MRNS). Suvretta Capital Management had $5.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $2.4 million investment in the stock during the quarter. The following funds were also among the new MRNS investors: D. E. Shaw’s D E Shaw, Greg Eisner’s Engineers Gate Manager, and Greg Martinez’s Parkman Healthcare Partners.
Let’s also examine hedge fund activity in other stocks similar to Marinus Pharmaceuticals Inc (NASDAQ:MRNS). These stocks are Macatawa Bank Corporation (NASDAQ:MCBC), U.S. Silica Holdings Inc (NYSE:SLCA), Vista Oil & Gas, S.A.B. de C.V. (NYSE:VIST), Metropolitan Bank Holding Corp. (NYSE:MCB), iBio, Inc. (NYSE:IBIO), Equity Bancshares, Inc. (NASDAQ:EQBK), and Gogo Inc (NASDAQ:GOGO). This group of stocks’ market values resemble MRNS’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 9.3 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $107 million in MRNS’s case. Gogo Inc (NASDAQ:GOGO) is the most popular stock in this table. On the other hand iBio, Inc. (NYSE:IBIO) is the least popular one with only 2 bullish hedge fund positions. Marinus Pharmaceuticals Inc (NASDAQ:MRNS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRNS is 90. 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. 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 third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on MRNS as the stock returned 26.5% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.