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Hedge Funds Are Piling Into Immunovant, Inc. (IMVT)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Immunovant, Inc. (NASDAQ:IMVT) based on that data and determine whether they were really smart about the stock.

Immunovant, Inc. (NASDAQ:IMVT) has seen an increase in enthusiasm from smart money in recent months. Immunovant, Inc. (NASDAQ:IMVT) was in 31 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 28 hedge funds in our database with IMVT holdings at the end of March. Our calculations also showed that IMVT 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 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 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Keeping this in mind let’s view the key hedge fund action surrounding Immunovant, Inc. (NASDAQ:IMVT).

How are hedge funds trading Immunovant, Inc. (NASDAQ:IMVT)?

At the end of June, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in IMVT over the last 20 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Among these funds, Adage Capital Management held the most valuable stake in Immunovant, Inc. (NASDAQ:IMVT), which was worth $57.6 million at the end of the third quarter. On the second spot was Polar Capital which amassed $43.1 million worth of shares. Perceptive Advisors, Biotechnology Value Fund / BVF Inc, and Driehaus 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 Ghost Tree Capital allocated the biggest weight to Immunovant, Inc. (NASDAQ:IMVT), around 3.37% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, setting aside 3.04 percent of its 13F equity portfolio to IMVT.

Now, key hedge funds have jumped into Immunovant, Inc. (NASDAQ:IMVT) headfirst. Perceptive Advisors, managed by Joseph Edelman, established the biggest position in Immunovant, Inc. (NASDAQ:IMVT). Perceptive Advisors had $26.8 million invested in the company at the end of the quarter. Stephen DuBois’s Camber Capital Management also made a $19.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Arsani William’s Logos Capital, Jeremy Green’s Redmile Group, and Manfred Yu’s Acuta Capital Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Immunovant, Inc. (NASDAQ:IMVT) but similarly valued. These stocks are PQ Group Holdings Inc. (NYSE:PQG), SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), American Eagle Outfitters Inc. (NYSE:AEO), Madison Square Garden Entertainment Corp. (NYSE:MSGE), AtriCure Inc. (NASDAQ:ATRC), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), and Federal Signal Corporation (NYSE:FSS). This group of stocks’ market valuations resemble IMVT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PQG 6 46807 -1
SWTX 15 754975 1
AEO 36 519270 10
MSGE 38 404860 38
ATRC 23 270054 3
LGND 22 266817 -5
FSS 12 39674 -3
Average 21.7 328922 6.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $329 million. That figure was $330 million in IMVT’s case. Madison Square Garden Entertainment Corp. (NYSE:MSGE) is the most popular stock in this table. On the other hand PQ Group Holdings Inc. (NYSE:PQG) is the least popular one with only 6 bullish hedge fund positions. Immunovant, Inc. (NASDAQ:IMVT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IMVT is 77.1. 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 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on IMVT as the stock returned 57.8% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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