The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Revolution Medicines, Inc. (NASDAQ:RVMD) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is RVMD a good stock to buy now? Revolution Medicines, Inc. (NASDAQ:RVMD) investors should be aware of an increase in enthusiasm from smart money recently. Revolution Medicines, Inc. (NASDAQ:RVMD) was in 15 hedge funds’ portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that RVMD 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.
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. Now let’s review the new hedge fund action surrounding Revolution Medicines, Inc. (NASDAQ:RVMD).
Do Hedge Funds Think RVMD Is A Good Stock To Buy Now?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in RVMD over the last 21 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Cormorant Asset Management was the largest shareholder of Revolution Medicines, Inc. (NASDAQ:RVMD), with a stake worth $91.9 million reported as of the end of September. Trailing Cormorant Asset Management was Biotechnology Value Fund / BVF Inc, which amassed a stake valued at $73.1 million. Deerfield Management, Casdin Capital, and Harvard Management Co 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Revolution Medicines, Inc. (NASDAQ:RVMD), around 3.98% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, designating 3.53 percent of its 13F equity portfolio to RVMD.
As industrywide interest jumped, some big names have jumped into Revolution Medicines, Inc. (NASDAQ:RVMD) headfirst. Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, created the most outsized position in Revolution Medicines, Inc. (NASDAQ:RVMD). Sectoral Asset Management had $22 million invested in the company at the end of the quarter. Christopher James’s Partner Fund Management also initiated a $12.5 million position during the quarter. The following funds were also among the new RVMD investors: John W. Rende’s Copernicus Capital Management and Michael Rockefeller and KarláKroeker’s Woodline Partners.
Let’s go over hedge fund activity in other stocks similar to Revolution Medicines, Inc. (NASDAQ:RVMD). These stocks are Mercury General Corporation (NYSE:MCY), TreeHouse Foods Inc. (NYSE:THS), Focus Financial Partners Inc. (NASDAQ:FOCS), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), International Game Technology PLC (NYSE:IGT), MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI), and Ryder System, Inc. (NYSE:R). All of these stocks’ market caps are similar to RVMD’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 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $371 million in RVMD’s case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 11 bullish hedge fund positions. Revolution Medicines, Inc. (NASDAQ:RVMD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for RVMD is 40. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on RVMD as the stock returned 24.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.