The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded MeiraGTx Holdings plc (NASDAQ:MGTX) based on those filings.
MeiraGTx Holdings plc (NASDAQ:MGTX) investors should be aware of a decrease in activity from the world’s largest hedge funds recently. MGTX was in 17 hedge funds’ portfolios at the end of March. There were 21 hedge funds in our database with MGTX holdings at the end of the previous quarter. Our calculations also showed that MGTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 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. 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 Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the recent hedge fund action encompassing MeiraGTx Holdings plc (NASDAQ:MGTX).
What does smart money think about MeiraGTx Holdings plc (NASDAQ:MGTX)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from the fourth quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in MGTX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Perceptive Advisors was the largest shareholder of MeiraGTx Holdings plc (NASDAQ:MGTX), with a stake worth $86.5 million reported as of the end of September. Trailing Perceptive Advisors was OrbiMed Advisors, which amassed a stake valued at $48.1 million. Prosight Capital, Adage Capital Management, and 683 Capital Partners 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 Prosight Capital allocated the biggest weight to MeiraGTx Holdings plc (NASDAQ:MGTX), around 3.57% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, designating 2.25 percent of its 13F equity portfolio to MGTX.
Judging by the fact that MeiraGTx Holdings plc (NASDAQ:MGTX) has witnessed falling interest from hedge fund managers, it’s easy to see that there was a specific group of hedgies who were dropping their positions entirely last quarter. Intriguingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors cut the largest position of the “upper crust” of funds watched by Insider Monkey, comprising close to $1.8 million in stock. Israel Englander’s fund, Millennium Management, also dumped its stock, about $1.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as MeiraGTx Holdings plc (NASDAQ:MGTX) but similarly valued. These stocks are ANI Pharmaceuticals Inc (NASDAQ:ANIP), FutureFuel Corp. (NYSE:FF), Trueblue Inc (NYSE:TBI), and United Natural Foods, Inc. (NYSE:UNFI). This group of stocks’ market valuations are closest to MGTX’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 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $171 million in MGTX’s case. United Natural Foods, Inc. (NASDAQ:UNFI) is the most popular stock in this table. On the other hand Trueblue Inc (NYSE:TBI) is the least popular one with only 10 bullish hedge fund positions. MeiraGTx Holdings plc (NASDAQ:MGTX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately MGTX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MGTX were disappointed as the stock returned 3.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.