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MorphoSys AG (MOR): Are Hedge Funds Right About This Stock?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded MorphoSys AG (NASDAQ:MOR) based on those filings.

MorphoSys AG (NASDAQ:MOR) was in 5 hedge funds’ portfolios at the end of March. MOR investors should pay attention to a decrease in activity from the world’s largest hedge funds of late. There were 6 hedge funds in our database with MOR positions at the end of the previous quarter. Our calculations also showed that MOR 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 traders, hedge funds are perceived as underperforming, old financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, Our researchers choose to focus on the masters of this club, about 850 funds. These money managers direct the lion’s share of all hedge funds’ total capital, and by keeping an eye on their inimitable picks, Insider Monkey has unsheathed many investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year 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 .

RENAISSANCE TECHNOLOGIES

Jim Simons Founder of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the recent hedge fund action surrounding MorphoSys AG (NASDAQ:MOR).

What does smart money think about MorphoSys AG (NASDAQ:MOR)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MOR over the last 18 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.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Christopher James’s Partner Fund Management has the largest position in MorphoSys AG (NASDAQ:MOR), worth close to $9.3 million, corresponding to 0.8% of its total 13F portfolio. The second most bullish fund manager is Marc Schneidman of Aquilo Capital Management, with a $2.4 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to MorphoSys AG (NASDAQ:MOR), around 0.92% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, setting aside 0.76 percent of its 13F equity portfolio to MOR.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Consonance Capital Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified MOR as a viable investment and initiated a position in the stock.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as MorphoSys AG (NASDAQ:MOR) but similarly valued. We will take a look at Echostar Corporation (NASDAQ:SATS), Manpowergroup Inc (NYSE:MAN), Popular Inc (NASDAQ:BPOP), and Global Blood Therapeutics Inc (NASDAQ:GBT). This group of stocks’ market values resemble MOR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SATS 24 428894 -2
MAN 23 244244 -4
BPOP 28 468895 -5
GBT 23 431206 0
Average 24.5 393310 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $393 million. That figure was $15 million in MOR’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand Manpowergroup Inc (NYSE:MAN) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks MorphoSys AG (NASDAQ:MOR) is even less popular than MAN. Hedge funds clearly dropped the ball on MOR as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on MOR as the stock returned 31.7% so far in the second quarter and outperformed the market by an even larger margin.

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