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Is Rigel Pharmaceuticals, Inc. (RIGL) Going to Burn These Hedge Funds?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL).

Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) was in 14 hedge funds’ portfolios at the end of March. RIGL investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 17 hedge funds in our database with RIGL positions at the end of the previous quarter. Our calculations also showed that RIGL isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

If you’d ask most market participants, hedge funds are assumed to be slow, old financial tools of yesteryear. While there are over 8000 funds with their doors open at the moment, Our experts look at the bigwigs of this group, around 850 funds. These hedge fund managers handle the lion’s share of the hedge fund industry’s total capital, and by monitoring their matchless equity investments, Insider Monkey has found several investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Justin John Ferayorni - Tamarack Capital Management

Justin John Ferayorni of Tamarack Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the recent hedge fund action encompassing Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL).

How have hedgies been trading Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL)?

At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in RIGL 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.

Among these funds, Millennium Management held the most valuable stake in Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), which was worth $12.7 million at the end of the third quarter. On the second spot was Tamarack Capital Management which amassed $8.7 million worth of shares. Rock Springs Capital Management, Renaissance Technologies, and Citadel Investment Group 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 Tamarack Capital Management allocated the biggest weight to Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), around 3.28% of its 13F portfolio. Palo Alto Investors is also relatively very bullish on the stock, designating 0.46 percent of its 13F equity portfolio to RIGL.

Because Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) has faced falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds that slashed their positions entirely heading into Q4. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dropped the biggest investment of all the hedgies watched by Insider Monkey, comprising an estimated $0.3 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund sold off about $0.1 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL). These stocks are Concert Pharmaceuticals Inc (NASDAQ:CNCE), Whitestone REIT (NYSE:WSR), American National BankShares Inc (NASDAQ:AMNB), and Source Capital, Inc. (NYSE:SOR). All of these stocks’ market caps resemble RIGL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CNCE 12 67635 0
WSR 5 14190 1
AMNB 3 5655 1
SOR 4 12484 2
Average 6 24991 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $61 million in RIGL’s case. Concert Pharmaceuticals Inc (NASDAQ:CNCE) is the most popular stock in this table. On the other hand American National BankShares Inc (NASDAQ:AMNB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on RIGL as the stock returned 30.1% so far in Q2 (through June 25th) 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.

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