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Hedge Funds Have Never Been This Bullish On Aeglea BioTherapeutics, Inc. (AGLE)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 6 percentage points during the first 5 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE).

Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) has seen an increase in support from the world’s most elite money managers lately. AGLE was in 17 hedge funds’ portfolios at the end of March. There were 11 hedge funds in our database with AGLE positions at the end of the previous quarter. Our calculations also showed that agle isn’t among the 30 most popular stocks among hedge funds.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Samuel Isaly Orbimed Advisors

Let’s take a glance at the latest hedge fund action regarding Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE).

What does the smart money think about Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE)?

Heading into the second quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 55% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AGLE over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with AGLE Positions

More specifically, Nantahala Capital Management was the largest shareholder of Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), with a stake worth $21.4 million reported as of the end of March. Trailing Nantahala Capital Management was OrbiMed Advisors, which amassed a stake valued at $17.4 million. Baker Bros. Advisors, Adage Capital Management, and Rock Springs Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, key money managers have jumped into Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) headfirst. Deerfield Management, managed by James E. Flynn, initiated the biggest position in Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE). Deerfield Management had $4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3 million investment in the stock during the quarter. The other funds with brand new AGLE positions are Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw, and David Harding’s Winton Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) but similarly valued. These stocks are FVCBankcorp, Inc. (NASDAQ:FVCB), PolarityTE, Inc. (NASDAQ:PTE), Kamada Ltd (NASDAQ:KMDA), and MBT Financial Corp. (NASDAQ:MBTF). This group of stocks’ market values match AGLE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FVCB 3 7575 0
PTE 10 44304 -3
KMDA 4 9017 1
MBTF 7 15340 2
Average 6 19059 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $84 million in AGLE’s case. PolarityTE, Inc. (NASDAQ:PTE) is the most popular stock in this table. On the other hand FVCBankcorp, Inc. (NASDAQ:FVCB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately AGLE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AGLE were disappointed as the stock returned -19% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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

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