In this article we will take a look at whether hedge funds think Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is AGLE a good stock to buy now? Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) has experienced an increase in support from the world’s most elite money managers of late. Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that AGLE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 latest hedge fund action surrounding Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE).
Do Hedge Funds Think AGLE Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in AGLE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Baker Bros. Advisors held the most valuable stake in Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), which was worth $31.1 million at the end of the third quarter. On the second spot was OrbiMed Advisors which amassed $28.5 million worth of shares. Nantahala Capital Management, Adage Capital Management, and Rock Springs Capital Management 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 Samsara BioCapital allocated the biggest weight to Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), around 1.75% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 0.68 percent of its 13F equity portfolio to AGLE.
As aggregate interest increased, key hedge funds have been driving this bullishness. Opaleye Management, managed by James A. Silverman, assembled the largest position in Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE). Opaleye Management had $2.7 million invested in the company at the end of the quarter. Peter Algert’s Algert Global also initiated a $0.8 million position during the quarter. The other funds with brand new AGLE positions are Greg Eisner’s Engineers Gate Manager, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now review hedge fund activity in other stocks similar to Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE). These stocks are Capital City Bank Group, Inc. (NASDAQ:CCBG), Qudian Inc. (NYSE:QD), Great Panther Mining Ltd (NYSE:GPL), The Container Store Group Inc (NYSE:TCS), Source Capital, Inc. (NYSE:SOR), Akoustis Technologies, Inc. (NASDAQ:AKTS), and Heritage-Crystal Clean, Inc. (NASDAQ:HCCI). This group of stocks’ market valuations are closest to AGLE’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $148 million in AGLE’s case. The Container Store Group Inc (NYSE:TCS) is the most popular stock in this table. On the other hand Source Capital, Inc. (NYSE:SOR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is more popular among hedge funds. Our overall hedge fund sentiment score for AGLE is 88. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on AGLE as the stock returned 22.7% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.