At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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 Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Is Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) going to take off soon? Hedge funds were betting on the stock. The number of long hedge fund bets improved by 4 in recent months. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) was in 18 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 20. Our calculations also showed that RIGL 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.
If you’d ask most investors, hedge funds are perceived as unimportant, old financial tools of yesteryear. While there are over 8000 funds with their doors open today, Our researchers choose to focus on the moguls of this club, approximately 850 funds. Most estimates calculate that this group of people shepherd the majority of the smart money’s total capital, and by following their first-class picks, Insider Monkey has unearthed a few investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually 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 .
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 real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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. Keeping this in mind we’re going to analyze the recent hedge fund action encompassing Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL).
How are hedge funds trading Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL)?
At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in RIGL a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Tamarack Capital Management held the most valuable stake in Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), which was worth $12.5 million at the end of the third quarter. On the second spot was Rock Springs Capital Management which amassed $10.8 million worth of shares. Renaissance Technologies, Citadel Investment Group, and Palo Alto Investors 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 Tamarack Capital Management allocated the biggest weight to Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), around 3.49% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, designating 0.39 percent of its 13F equity portfolio to RIGL.
Consequently, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL). Arrowstreet Capital had $2 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $1 million investment in the stock during the quarter. The following funds were also among the new RIGL investors: Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Michael Gelband’s ExodusPoint Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL). These stocks are Tellurian Inc. (NASDAQ:TELL), Bonanza Creek Energy Inc (NYSE:BCEI), CRA International, Inc. (NASDAQ:CRAI), Brightcove Inc (NASDAQ:BCOV), Whitestone REIT (NYSE:WSR), Ares Commercial Real Estate Corp (NYSE:ACRE), and Intelligent Systems Corporation (NYSE:INS). This group of stocks’ market valuations resemble RIGL’s market valuation.
|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 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $69 million in RIGL’s case. Brightcove Inc (NASDAQ:BCOV) is the most popular stock in this table. On the other hand Tellurian Inc. (NASDAQ:TELL) is the least popular one with only 4 bullish hedge fund positions. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RIGL is 86. 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 RIGL as the stock returned 31.1% during Q3 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.