Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is Seattle Genetics, Inc. (NASDAQ:SGEN) ready to rally soon? Prominent investors are buying. The number of long hedge fund bets went up by 5 lately. At the end of this article we will also compare SGEN to other stocks including Cameco Corporation (USA) (NYSE:CCJ), Michaels Companies Inc (NASDAQ:MIK), and Zillow Inc (NASDAQ:Z) to get a better sense of its popularity.
Keeping this in mind, let’s check out the new action encompassing Seattle Genetics, Inc. (NASDAQ:SGEN).
What does the smart money think about Seattle Genetics, Inc. (NASDAQ:SGEN)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the largest position in Seattle Genetics, Inc. (NASDAQ:SGEN). Baker Bros. Advisors has a $1.3893 billion position in the stock, comprising 12.8% of its 13F portfolio. On Baker Bros. Advisors’s heels is Jeremy Green of Redmile Group, with a $469.7 million position; the fund has 10.8% of its 13F portfolio invested in the stock. Some other peers that are bullish contain Ken Griffin’s Citadel Investment Group, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management and Richard Chilton’s Chilton Investment Company.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, assembled the most outsized position in Seattle Genetics, Inc. (NASDAQ:SGEN). Citadel Investment Group had $132 million invested in the company at the end of the quarter. Richard Chilton’s Chilton Investment Company also made a $11.3 million investment in the stock during the quarter. The other funds with new positions in the stock are John Burbank’s Passport Capital, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Seattle Genetics, Inc. (NASDAQ:SGEN) but similarly valued. These stocks are Cameco Corporation (USA) (NYSE:CCJ), Michaels Companies Inc (NASDAQ:MIK), Zillow Inc (NASDAQ:Z), and Quanta Services Inc (NYSE:PWR). This group of stocks’ market caps resemble SGEN’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $364 million. That figure was $2,092 million in SGEN’s case. Quanta Services Inc (NYSE:PWR) is the most popular stock in this table. On the other hand Cameco Corporation (USA) (NYSE:CCJ) is the least popular one with only 21 bullish hedge fund positions. Given the absolute size of the elite hedge funds’ positions and the recent increase in interest in SGEN, the stock is worth a closer look.