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Hedge Funds Had Impeccable Timing Buying Seattle Genetics, Inc. (SGEN)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Seattle Genetics, Inc. (NASDAQ:SGEN).

Seattle Genetics, Inc. (NASDAQ:SGEN) has experienced an increase in hedge fund sentiment recently. SGEN was in 27 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with SGEN holdings at the end of the previous quarter. Our calculations also showed that SGEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most market participants, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open at the moment, We look at the aristocrats of this club, about 750 funds. It is estimated that this group of investors command most of the smart money’s total asset base, and by shadowing their best equity investments, Insider Monkey has determined various investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the fresh hedge fund action surrounding Seattle Genetics, Inc. (NASDAQ:SGEN).

Hedge fund activity in Seattle Genetics, Inc. (NASDAQ:SGEN)

Heading into the fourth quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 59% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SGEN over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

SGEN_dec2019

More specifically, Baker Bros. Advisors was the largest shareholder of Seattle Genetics, Inc. (NASDAQ:SGEN), with a stake worth $4274.9 million reported as of the end of September. Trailing Baker Bros. Advisors was Matrix Capital Management, which amassed a stake valued at $136.5 million. Point72 Asset Management, Citadel Investment Group, and Rock Springs 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 Baker Bros. Advisors allocated the biggest weight to Seattle Genetics, Inc. (NASDAQ:SGEN), around 29.08% of its portfolio. Matrix Capital Management is also relatively very bullish on the stock, earmarking 3.37 percent of its 13F equity portfolio to SGEN.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Seattle Genetics, Inc. (NASDAQ:SGEN) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the biggest position in Seattle Genetics, Inc. (NASDAQ:SGEN). Polar Capital had $4.3 million invested in the company at the end of the quarter. Renaissance Technologies also made a $3.7 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Paul Tudor Jones’s Tudor Investment Corp, and Joseph Edelman’s Perceptive Advisors.

Let’s also examine hedge fund activity in other stocks similar to Seattle Genetics, Inc. (NASDAQ:SGEN). These stocks are Cardinal Health, Inc. (NYSE:CAH), CNH Industrial NV (NYSE:CNHI), Grifols SA (NASDAQ:GRFS), and Concho Resources Inc. (NYSE:CXO). All of these stocks’ market caps are closest to SGEN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAH 25 776365 -3
CNHI 14 341649 0
GRFS 19 361224 3
CXO 28 387562 1
Average 21.5 466700 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $467 million. That figure was $4588 million in SGEN’s case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 14 bullish hedge fund positions. Seattle Genetics, Inc. (NASDAQ:SGEN) is not the most popular stock in this group but hedge fund interest is still above average. 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 SGEN as the stock returned 40.9% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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