It was a rough fourth quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Novavax, Inc. (NASDAQ:NVAX) changed during the first quarter.
According to most shareholders, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are over 8000 funds trading at the moment, Our researchers choose to focus on the masters of this club, about 750 funds. These investment experts watch over most of the hedge fund industry’s total capital, and by tracking their unrivaled equity investments, Insider Monkey has revealed a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
We’re going to take a peek at the latest hedge fund action surrounding Novavax, Inc. (NASDAQ:NVAX).
How are hedge funds trading Novavax, Inc. (NASDAQ:NVAX)?
At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in NVAX a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Novavax, Inc. (NASDAQ:NVAX) was held by Citadel Investment Group, which reported holding $3.1 million worth of stock at the end of March. It was followed by Great Point Partners with a $2.5 million position. Other investors bullish on the company included Rock Springs Capital Management, Two Sigma Advisors, and Renaissance Technologies.
Since Novavax, Inc. (NASDAQ:NVAX) has experienced falling interest from the smart money, we can see that there was a specific group of fund managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Julian Baker and Felix Baker’s Baker Bros. Advisors dumped the largest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $8.7 million in stock. John M. Angelo and Michael L. Gordon’s fund, Angelo Gordon & Co, also dropped its stock, about $6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks similar to Novavax, Inc. (NASDAQ:NVAX). We will take a look at NCS Multistage Holdings, Inc. (NASDAQ:NCSM), Gold Resource Corporation (NYSE:GORO), Cytosorbents Corp (NASDAQ:CTSO), and Kodiak Sciences Inc (NASDAQ:KOD). This group of stocks’ market valuations match NVAX’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 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $9 million in NVAX’s case. Gold Resource Corporation (NYSE:GORO) is the most popular stock in this table. On the other hand NCS Multistage Holdings, Inc. (NASDAQ:NCSM) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Novavax, Inc. (NASDAQ:NVAX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NVAX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NVAX were disappointed as the stock returned -53.3% 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.