Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Marinus Pharmaceuticals Inc (NASDAQ:MRNS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is MRNS a good stock to buy now? Prominent investors were getting less optimistic. The number of bullish hedge fund positions were cut by 5 recently. Marinus Pharmaceuticals Inc (NASDAQ:MRNS) was in 13 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 18. Our calculations also showed that MRNS 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). There were 18 hedge funds in our database with MRNS positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 we’re going to analyze the recent hedge fund action encompassing Marinus Pharmaceuticals Inc (NASDAQ:MRNS).
Do Hedge Funds Think MRNS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the second quarter of 2020. By comparison, 7 hedge funds held shares or bullish call options in MRNS a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Marinus Pharmaceuticals Inc (NASDAQ:MRNS) was held by Avoro Capital Advisors (venBio Select Advisor), which reported holding $38.6 million worth of stock at the end of September. It was followed by Lion Point with a $34.9 million position. Other investors bullish on the company included Adage Capital Management, 683 Capital Partners, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Lion Point allocated the biggest weight to Marinus Pharmaceuticals Inc (NASDAQ:MRNS), around 7.66% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, designating 0.91 percent of its 13F equity portfolio to MRNS.
Because Marinus Pharmaceuticals Inc (NASDAQ:MRNS) has experienced a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of hedgies who sold off their positions entirely heading into Q4. Interestingly, David Harding’s Winton Capital Management sold off the largest investment of the 750 funds tracked by Insider Monkey, worth about $3 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund said goodbye to about $1.2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Marinus Pharmaceuticals Inc (NASDAQ:MRNS) but similarly valued. These stocks are Franklin Street Properties Corp. (NYSE:FSP), Designer Brands Inc. (NYSE:DBI), Eros STX Global Corporation (NYSE:ESGC), Bonanza Creek Energy Inc (NYSE:BCEI), Granite Point Mortgage Trust Inc. (NYSE:GPMT), Kimball International Inc (NASDAQ:KBAL), and Golden Entertainment Inc (NASDAQ:GDEN). This group of stocks’ market caps are closest to MRNS’s market cap.
|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 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $44 million. That figure was $149 million in MRNS’s case. Kimball International Inc (NASDAQ:KBAL) is the most popular stock in this table. On the other hand Eros STX Global Corporation (NYSE:ESGC) is the least popular one with only 5 bullish hedge fund positions. Marinus Pharmaceuticals Inc (NASDAQ:MRNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MRNS is 50.2. 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 negative signal and 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 surpassed the market again by 16.2 percentage points. Unfortunately MRNS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MRNS investors were disappointed as the stock returned 7.1% 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.