Hedge Funds Have Never Been This Bullish On MacroGenics Inc (MGNX)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of MacroGenics Inc (NASDAQ:MGNX).

Is MacroGenics Inc (NASDAQ:MGNX) a buy here? The smart money was taking an optimistic view. The number of long hedge fund positions rose by 7 in recent months. MacroGenics Inc (NASDAQ:MGNX) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MGNX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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’ 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 115 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.

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Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to check out the fresh hedge fund action regarding MacroGenics Inc (NASDAQ:MGNX).

Do Hedge Funds Think MGNX Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from the fourth quarter of 2020. On the other hand, there were a total of 16 hedge funds with a bullish position in MGNX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MGNX A Good Stock To Buy?

Among these funds, RA Capital Management held the most valuable stake in MacroGenics Inc (NASDAQ:MGNX), which was worth $157.1 million at the end of the fourth quarter. On the second spot was Consonance Capital Management which amassed $78.7 million worth of shares. Citadel Investment Group, Perceptive Advisors, and Great Point 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 Great Point Partners allocated the biggest weight to MacroGenics Inc (NASDAQ:MGNX), around 8.89% of its 13F portfolio. Consonance Capital Management is also relatively very bullish on the stock, designating 8.39 percent of its 13F equity portfolio to MGNX.

Consequently, specific money managers were leading the bulls’ herd. Ikarian Capital, managed by Neil Shahrestani, created the biggest position in MacroGenics Inc (NASDAQ:MGNX). Ikarian Capital had $15.9 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $11.8 million position during the quarter. The other funds with new positions in the stock are Abhishek Trehan’s Darwin Global Management, Neil Shahrestani’s Ikarian Capital, and Efrem Kamen’s Pura Vida Investments.

Let’s go over hedge fund activity in other stocks similar to MacroGenics Inc (NASDAQ:MGNX). These stocks are AppHarvest, Inc. (NASDAQ:APPH), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), Horace Mann Educators Corporation (NYSE:HMN), GMS Inc. (NYSE:GMS), ArcBest Corp (NASDAQ:ARCB), Virtus Investment Partners Inc (NASDAQ:VRTS), and Ping Identity Holding Corp. (NYSE:PING). This group of stocks’ market caps match MGNX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APPH 21 380762 21
FLWS 22 62575 -5
HMN 14 43951 1
GMS 19 266527 3
ARCB 13 87202 -1
VRTS 20 143608 0
PING 11 873908 -5
Average 17.1 265505 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $266 million. That figure was $597 million in MGNX’s case. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) is the most popular stock in this table. On the other hand Ping Identity Holding Corp. (NYSE:PING) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks MacroGenics Inc (NASDAQ:MGNX) is more popular among hedge funds. Our overall hedge fund sentiment score for MGNX is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately MGNX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MGNX were disappointed as the stock returned -9.9% since the end of the first quarter (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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