We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Voyager Therapeutics, Inc. (NASDAQ:VYGR).
Voyager Therapeutics, Inc. (NASDAQ:VYGR) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Our calculations also showed that VYGR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s review the new hedge fund action regarding Voyager Therapeutics, Inc. (NASDAQ:VYGR).
What have hedge funds been doing with Voyager Therapeutics, Inc. (NASDAQ:VYGR)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in VYGR a year ago. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Among these funds, Casdin Capital held the most valuable stake in Voyager Therapeutics, Inc. (NASDAQ:VYGR), which was worth $30.7 million at the end of the third quarter. On the second spot was Partner Fund Management which amassed $21.2 million worth of shares. Armistice Capital, 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 Casdin Capital allocated the biggest weight to Voyager Therapeutics, Inc. (NASDAQ:VYGR), around 3.07% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, dishing out 1.25 percent of its 13F equity portfolio to VYGR.
Seeing as Voyager Therapeutics, Inc. (NASDAQ:VYGR) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of money managers who were dropping their full holdings heading into Q4. Intriguingly, Farallon Capital sold off the largest position of the 750 funds followed by Insider Monkey, comprising close to $20.4 million in stock. Israel Englander’s fund, Millennium Management, also dropped its stock, about $13.3 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Voyager Therapeutics, Inc. (NASDAQ:VYGR) but similarly valued. These stocks are NexTier Oilfield Solutions Inc. (NYSE:FRAC), Midland States Bancorp, Inc. (NASDAQ:MSBI), Sabine Royalty Trust (NYSE:SBR), and Fossil Group Inc (NASDAQ:FOSL). This group of stocks’ market valuations resemble VYGR’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 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $108 million in VYGR’s case. NexTier Oilfield Solutions Inc. (NYSE:FRAC) is the most popular stock in this table. On the other hand Sabine Royalty Trust (NYSE:SBR) is the least popular one with only 6 bullish hedge fund positions. Voyager Therapeutics, Inc. (NASDAQ:VYGR) is not the most popular stock in this group but hedge fund interest is still above average. 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately VYGR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VYGR were disappointed as the stock returned -20.7% during the fourth quarter (through the end of November) 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.