Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Annexon, Inc. (NASDAQ:ANNX) to find out whether there were any major changes in hedge funds’ views.
Is ANNX a good stock to buy now? Prominent investors were getting more bullish. The number of bullish hedge fund positions moved up by 11 in recent months. Annexon, Inc. (NASDAQ:ANNX) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that ANNX 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 lot of signals stock traders use to value stocks. Some of the most underrated signals are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can beat their index-focused peers by a superb amount (see the details here).
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 let’s take a gander at the key hedge fund action surrounding Annexon, Inc. (NASDAQ:ANNX).
Do Hedge Funds Think ANNX Is A Good Stock To Buy Now?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in ANNX a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Annexon, Inc. (NASDAQ:ANNX) was held by Redmile Group, which reported holding $104.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $63.5 million position. Other investors bullish on the company included Deerfield Management, Farallon Capital, and Adage Capital Management. In terms of the portfolio weights assigned to each position Redmile Group allocated the biggest weight to Annexon, Inc. (NASDAQ:ANNX), around 1.91% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, dishing out 1.19 percent of its 13F equity portfolio to ANNX.
Now, key hedge funds were leading the bulls’ herd. Redmile Group, managed by Jeremy Green, established the most valuable position in Annexon, Inc. (NASDAQ:ANNX). Redmile Group had $104.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $63.5 million position during the quarter. The other funds with brand new ANNX positions are James E. Flynn’s Deerfield Management, Farallon Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Annexon, Inc. (NASDAQ:ANNX). These stocks are EnLink Midstream LLC (NYSE:ENLC), Opera Limited (NASDAQ:OPRA), New Gold Inc. (NYSE:NGD), SilverCrest Metals Inc. (NYSE:SILV), Atrion Corporation (NASDAQ:ATRI), Mack Cali Realty Corp (NYSE:CLI), and Victory Capital Holdings, Inc. (NASDAQ:VCTR). All of these stocks’ market caps resemble ANNX’s market cap.
|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 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $324 million in ANNX’s case. New Gold Inc. (NYSE:NGD) is the most popular stock in this table. On the other hand Opera Limited (NASDAQ:OPRA) is the least popular one with only 4 bullish hedge fund positions. Annexon, Inc. (NASDAQ:ANNX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ANNX is 80. 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 ANNX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ANNX were disappointed as the stock returned -17.4% 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.
Disclosure: None. This article was originally published at Insider Monkey.