Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Novavax, Inc. (NASDAQ:NVAX) changed recently.
Is NVAX a good stock to buy? Novavax, Inc. (NASDAQ:NVAX) has seen an increase in hedge fund interest lately. Novavax, Inc. (NASDAQ:NVAX) was in 36 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 18 hedge funds in our database with NVAX holdings at the end of June. Our calculations also showed that NVAX 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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 leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 peek at the key hedge fund action surrounding Novavax, Inc. (NASDAQ:NVAX).
Do Hedge Funds Think NVAX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NVAX over the last 21 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.
The largest stake in Novavax, Inc. (NASDAQ:NVAX) was held by RA Capital Management, which reported holding $129.9 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $95.4 million position. Other investors bullish on the company included Perceptive Advisors, Point72 Asset Management, and Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Discovery Capital Management allocated the biggest weight to Novavax, Inc. (NASDAQ:NVAX), around 4.94% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, designating 2.38 percent of its 13F equity portfolio to NVAX.
Now, key hedge funds have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, established the most valuable position in Novavax, Inc. (NASDAQ:NVAX). Point72 Asset Management had $64.7 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $22.6 million position during the quarter. The other funds with brand new NVAX positions are Albert Cha and Frank Kung’s Vivo Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Novavax, Inc. (NASDAQ:NVAX) but similarly valued. We will take a look at Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Athene Holding Ltd. (NYSE:ATH), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), CF Industries Holdings, Inc. (NYSE:CF), Casey’s General Stores, Inc. (NASDAQ:CASY), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), and Tata Motors Limited (NYSE:TTM). This group of stocks’ market valuations are similar to NVAX’s market valuation.
|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 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $1001 million. That figure was $611 million in NVAX’s case. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 10 bullish hedge fund positions. Novavax, Inc. (NASDAQ:NVAX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVAX is 81.9. 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 gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on NVAX as the stock returned 15.2% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.