Hedge Funds Are Crazy About NGM Biopharmaceuticals, Inc. (NGM)

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).

NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) shareholders have witnessed an increase in hedge fund interest of late. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) was in 22 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NGM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s analyze the new hedge fund action surrounding NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).

Do Hedge Funds Think NGM Is A Good Stock To Buy Now?

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards NGM over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) was held by Redmile Group, which reported holding $52.7 million worth of stock at the end of September. It was followed by Stepstone Group with a $33.1 million position. Other investors bullish on the company included Point72 Asset Management, Biotechnology Value Fund / BVF Inc, and Euclidean Capital. In terms of the portfolio weights assigned to each position Euclidean Capital allocated the biggest weight to NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), around 8.5% of its 13F portfolio. Stepstone Group is also relatively very bullish on the stock, designating 2.14 percent of its 13F equity portfolio to NGM.

As industrywide interest jumped, specific money managers have jumped into NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) headfirst. Stepstone Group, managed by Jose Fernandez, assembled the largest position in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). Stepstone Group had $33.1 million invested in the company at the end of the quarter. Oleg Nodelman’s EcoR1 Capital also made a $5 million investment in the stock during the quarter. The other funds with brand new NGM positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Efrem Kamen’s Pura Vida Investments, and Guy Levy’s Soleus Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) but similarly valued. These stocks are Immunocore Holdings plc (NASDAQ:IMCR), Sculptor Capital Management, Inc. (NYSE:SCU), Wheels Up Experience Inc. (NYSE:UP), Sixth Street Specialty Lending Inc (NYSE:TSLX), Montrose Environmental Group, Inc. (NYSE:MEG), New York Mortgage Trust, Inc. (NASDAQ:NYMT), and Meta Materials Inc. (NASDAQ:MMAT). This group of stocks’ market valuations are closest to NGM’s market valuation.

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As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $97 million. That figure was $203 million in NGM’s case. Montrose Environmental Group, Inc. (NYSE:MEG) is the most popular stock in this table. On the other hand Meta Materials Inc. (NASDAQ:MMAT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is more popular among hedge funds. Our overall hedge fund sentiment score for NGM is 88. 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 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately NGM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NGM were disappointed as the stock returned -15.7% since the end of the third quarter (through 12/31) 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 most of these stocks already outperformed the market since 2019.

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