The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Arvinas, Inc. (NASDAQ:ARVN) based on those filings.
Is Arvinas, Inc. (NASDAQ:ARVN) ready to rally soon? Hedge funds were selling. The number of bullish hedge fund positions retreated by 6 recently. Arvinas, Inc. (NASDAQ:ARVN) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. Our calculations also showed that ARVN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 34 hedge funds in our database with ARVN positions at the end of the fourth quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Oleg Nodelman of EcoR1 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. 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 homepage. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding Arvinas, Inc. (NASDAQ:ARVN).
Do Hedge Funds Think ARVN Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ARVN over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Point72 Asset Management was the largest shareholder of Arvinas, Inc. (NASDAQ:ARVN), with a stake worth $74.6 million reported as of the end of March. Trailing Point72 Asset Management was Marshall Wace LLP, which amassed a stake valued at $42.6 million. Rock Springs Capital Management, Sectoral Asset Management, and Consonance Capital 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 Octagon Capital Advisors allocated the biggest weight to Arvinas, Inc. (NASDAQ:ARVN), around 4.44% of its 13F portfolio. Consonance Capital Management is also relatively very bullish on the stock, designating 3.24 percent of its 13F equity portfolio to ARVN.
Because Arvinas, Inc. (NASDAQ:ARVN) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of funds that elected to cut their positions entirely in the first quarter. It’s worth mentioning that Peter Kolchinsky’s RA Capital Management cut the biggest position of the 750 funds followed by Insider Monkey, worth close to $311.9 million in stock. Frank Fu’s fund, CaaS Capital, also said goodbye to its stock, about $18.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds in the first quarter.
Let’s check out hedge fund activity in other stocks similar to Arvinas, Inc. (NASDAQ:ARVN). We will take a look at Brinker International, Inc. (NYSE:EAT), Assured Guaranty Ltd. (NYSE:AGO), Shutterstock Inc (NYSE:SSTK), Revolve Group, Inc. (NYSE:RVLV), Vertex, Inc. (NASDAQ:VERX), Butterfly Network, Inc. (NYSE:BFLY), and Summit Materials Inc (NYSE:SUM). All of these stocks’ market caps are closest to ARVN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EAT | 31 | 475033 | 3 |
| AGO | 22 | 192881 | 5 |
| SSTK | 18 | 207880 | -5 |
| RVLV | 29 | 256608 | 5 |
| VERX | 11 | 40913 | 0 |
| BFLY | 32 | 299537 | 32 |
| SUM | 32 | 198758 | 1 |
| Average | 25 | 238801 | 5.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $366 million in ARVN’s case. Butterfly Network, Inc. (NYSE:BFLY) is the most popular stock in this table. On the other hand Vertex, Inc. (NASDAQ:VERX) is the least popular one with only 11 bullish hedge fund positions. Arvinas, Inc. (NASDAQ:ARVN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARVN is 64.2. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on ARVN as the stock returned 24.9% since the end of Q1 (through 7/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Arvinas Inc. (NASDAQ:ARVN)
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Disclosure: None. This article was originally published at Insider Monkey.
