Is AGIO Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Agios Pharmaceuticals Inc (NASDAQ:AGIO).

Is AGIO stock a buy? Agios Pharmaceuticals Inc (NASDAQ:AGIO) investors should be aware of a decrease in support from the world’s most elite money managers of late. Agios Pharmaceuticals Inc (NASDAQ:AGIO) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. There were 31 hedge funds in our database with AGIO holdings at the end of September. Our calculations also showed that AGIO isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to take a glance at the new hedge fund action surrounding Agios Pharmaceuticals Inc (NASDAQ:AGIO).

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

At fourth quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards AGIO over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Rock Springs Capital Management held the most valuable stake in Agios Pharmaceuticals Inc (NASDAQ:AGIO), which was worth $109.3 million at the end of the fourth quarter. On the second spot was Casdin Capital which amassed $102.9 million worth of shares. OrbiMed Advisors, Farallon Capital, and Healthcor Management LP 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 Casdin Capital allocated the biggest weight to Agios Pharmaceuticals Inc (NASDAQ:AGIO), around 3.05% of its 13F portfolio. Consonance Capital Management is also relatively very bullish on the stock, dishing out 2.55 percent of its 13F equity portfolio to AGIO.

Due to the fact that Agios Pharmaceuticals Inc (NASDAQ:AGIO) has faced declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of money managers that slashed their full holdings by the end of the fourth quarter. Intriguingly, Ken Greenberg and David Kim’s Ghost Tree Capital dumped the biggest stake of all the hedgies followed by Insider Monkey, totaling about $6.1 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund dumped about $4.9 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds by the end of the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Agios Pharmaceuticals Inc (NASDAQ:AGIO). These stocks are Brookfield Business Partners L.P. (NYSE:BBU), Vishay Intertechnology (NYSE:VSH), Freedom Holding Corp. (NASDAQ:FRHC), Green Dot Corporation (NYSE:GDOT), Hillenbrand, Inc. (NYSE:HI), First Majestic Silver Corp (NYSE:AG), and Youdao, Inc. (NYSE:DAO). All of these stocks’ market caps are similar to AGIO’s market cap.

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As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $220 million. That figure was $509 million in AGIO’s case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 3 bullish hedge fund positions. Agios Pharmaceuticals Inc (NASDAQ:AGIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AGIO is 64.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on AGIO as the stock returned 25.8% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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