After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Miragen Therapeutics, Inc. (NASDAQ:MGEN).
Is Miragen Therapeutics, Inc. (NASDAQ:MGEN) the right pick for your portfolio? Prominent investors are still very bullish about this stock even though the number of bullish hedge fund positions dropped by 1 lately. Our calculations also showed that MGEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings) but that’s normal for a stock this size.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now we’re going to review the fresh hedge fund action surrounding Miragen Therapeutics, Inc. (NASDAQ:MGEN).
What have hedge funds been doing with Miragen Therapeutics, Inc. (NASDAQ:MGEN)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MGEN over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Miragen Therapeutics, Inc. (NASDAQ:MGEN) was held by 683 Capital Partners, which reported holding $1.3 million worth of stock at the end of September. It was followed by Millennium Management with a $0.3 million position. Other investors bullish on the company included Renaissance Technologies, Point72 Asset Management, and D E Shaw. In terms of the portfolio weights assigned to each position 683 Capital Partners allocated the biggest weight to Miragen Therapeutics, Inc. (NASDAQ:MGEN), around 0.14% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, setting aside 0.0005 percent of its 13F equity portfolio to MGEN.
Seeing as Miragen Therapeutics, Inc. (NASDAQ:MGEN) has experienced declining sentiment from the smart money, it’s safe to say that there lies a certain “tier” of funds who were dropping their entire stakes heading into Q4. Intriguingly, Donald Sussman’s Paloma Partners dropped the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $0.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Miragen Therapeutics, Inc. (NASDAQ:MGEN). We will take a look at Taoping Inc. (NASDAQ:TAOP), ProPhase Labs Inc (NASDAQ:PRPH), Amira Nature Foods Ltd (NYSE:ANFI), and IsoRay, Inc. (NYSE:ISR). This group of stocks’ market valuations resemble MGEN’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 1.5 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $2 million in MGEN’s case. Amira Nature Foods Ltd (NYSE:ANFI) is the most popular stock in this table. On the other hand Taoping Inc. (NASDAQ:TAOP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Miragen Therapeutics, Inc. (NASDAQ:MGEN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MGEN, though not to the same extent, as the stock returned 9.4% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.