Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Regenxbio Inc (NASDAQ:RGNX) was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. RGNX shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 17 hedge funds in our database with RGNX holdings at the end of the previous quarter. Our calculations also showed that rgnx 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.
Let’s take a peek at the latest hedge fund action encompassing Regenxbio Inc (NASDAQ:RGNX).
What have hedge funds been doing with Regenxbio Inc (NASDAQ:RGNX)?
At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RGNX over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Redmile Group, managed by Jeremy Green, holds the biggest position in Regenxbio Inc (NASDAQ:RGNX). Redmile Group has a $81.4 million position in the stock, comprising 2.4% of its 13F portfolio. The second most bullish fund manager is Perceptive Advisors, managed by Joseph Edelman, which holds a $65.7 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Gilchrist Berg’s Water Street Capital, Jim Simons’s Renaissance Technologies and Ken Griffin’s Citadel Investment Group.
Now, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most outsized call position in Regenxbio Inc (NASDAQ:RGNX). Millennium Management had $2.9 million invested in the company at the end of the quarter. Peter A. Wright’s P.A.W. CAPITAL PARTNERS also initiated a $1.7 million position during the quarter. The following funds were also among the new RGNX investors: Minhua Zhang’s Weld Capital Management, Michael S. Weiss and Lindsay A. Rosenwald’s Opus Point Partners Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Regenxbio Inc (NASDAQ:RGNX) but similarly valued. These stocks are CareTrust REIT, Inc. (NASDAQ:CTRE), The Navigators Group, Inc (NASDAQ:NAVG), Brooks Automation, Inc. (NASDAQ:BRKS), and Patterson Companies, Inc. (NASDAQ:PDCO). All of these stocks’ market caps are closest to RGNX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTRE | 16 | 108917 | 0 |
| NAVG | 16 | 222914 | -1 |
| BRKS | 9 | 68932 | 0 |
| PDCO | 28 | 198667 | 0 |
| Average | 17.25 | 149858 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $318 million in RGNX’s case. Patterson Companies, Inc. (NASDAQ:PDCO) is the most popular stock in this table. On the other hand Brooks Automation, Inc. (NASDAQ:BRKS) is the least popular one with only 9 bullish hedge fund positions. Regenxbio Inc (NASDAQ:RGNX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 RGNX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RGNX were disappointed as the stock returned -23.7% 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
