Is AGTC A Good Stock To Buy Now?

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Applied Genetic Technologies Corp (NASDAQ:AGTC).

Is AGTC a good stock to buy now? Applied Genetic Technologies Corp (NASDAQ:AGTC) investors should be aware of an increase in enthusiasm from smart money in recent months. Applied Genetic Technologies Corp (NASDAQ:AGTC) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 19. There were 8 hedge funds in our database with AGTC positions at the end of the second quarter. Our calculations also showed that AGTC 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.

To the average investor there are a large number of methods stock traders have at their disposal to appraise stocks. Two of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can outpace the S&P 500 by a healthy amount (see the details here).

Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA Capital Management

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. With all of this in mind let’s take a glance at the latest hedge fund action encompassing Applied Genetic Technologies Corp (NASDAQ:AGTC).

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

At third quarter’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 38% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in AGTC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Portolan Capital Management held the most valuable stake in Applied Genetic Technologies Corp (NASDAQ:AGTC), which was worth $6.3 million at the end of the third quarter. On the second spot was DAFNA Capital Management which amassed $5.3 million worth of shares. Renaissance Technologies, Millennium Management, and Ikarian Capital 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 DAFNA Capital Management allocated the biggest weight to Applied Genetic Technologies Corp (NASDAQ:AGTC), around 1.73% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, setting aside 0.72 percent of its 13F equity portfolio to AGTC.

Consequently, specific money managers have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, initiated the largest position in Applied Genetic Technologies Corp (NASDAQ:AGTC). AQR Capital Management had $0.1 million invested in the company at the end of the quarter. Andre F. Perold’s HighVista Strategies also made a $0.1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Greg Eisner’s Engineers Gate Manager.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Applied Genetic Technologies Corp (NASDAQ:AGTC) but similarly valued. We will take a look at Protalix BioTherapeutics Inc. (NYSE:PLX), Barnes & Noble Education Inc (NYSE:BNED), Citizens Holding Company (NASDAQ:CIZN), Target Hospitality Corp. (NASDAQ:TH), Tyme Technologies, Inc. (NASDAQ:TYME), VivoPower International PLC (NASDAQ:VVPR), and Global Ship Lease, Inc. (NYSE:GSL). This group of stocks’ market valuations are closest to AGTC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLX 3 11491 -1
BNED 11 13375 -1
CIZN 1 787 0
TH 13 8350 -2
TYME 3 4087 -3
VVPR 2 3202 1
GSL 3 13492 -1
Average 5.1 7826 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $26 million in AGTC’s case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand Citizens Holding Company (NASDAQ:CIZN) is the least popular one with only 1 bullish hedge fund positions. Applied Genetic Technologies Corp (NASDAQ:AGTC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AGTC is 67. 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately AGTC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AGTC were disappointed as the stock returned -8.4% since the end of September (through 12/8) 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 many of these stocks already outperformed the market so far this year.

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