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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards MyoKardia, Inc. (NASDAQ:MYOK).
MyoKardia, Inc. (NASDAQ:MYOK) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. MYOK was in 33 hedge funds’ portfolios at the end of March. There were 26 hedge funds in our database with MYOK positions at the end of the previous quarter. Our calculations also showed that MYOK 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 51 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 trades like this one. 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. Now let’s take a look at the latest hedge fund action encompassing MyoKardia, Inc. (NASDAQ:MYOK).
What have hedge funds been doing with MyoKardia, Inc. (NASDAQ:MYOK)?
Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MYOK over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in MyoKardia, Inc. (NASDAQ:MYOK) was held by Baker Bros. Advisors, which reported holding $83.2 million worth of stock at the end of September. It was followed by Avoro Capital Advisors (venBio Select Advisor) with a $67.3 million position. Other investors bullish on the company included Perceptive Advisors, Casdin Capital, and Hillhouse Capital Management. In terms of the portfolio weights assigned to each position Foresite Capital allocated the biggest weight to MyoKardia, Inc. (NASDAQ:MYOK), around 28.77% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, dishing out 5.35 percent of its 13F equity portfolio to MYOK.
As industrywide interest jumped, specific money managers have been driving this bullishness. Great Point Partners, managed by Jeffrey Jay and David Kroin, created the largest position in MyoKardia, Inc. (NASDAQ:MYOK). Great Point Partners had $17.1 million invested in the company at the end of the quarter. Albert Cha and Frank Kung’s Vivo Capital also initiated a $15.6 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Henrik Rhenman’s Rhenman & Partners Asset Management, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to MyoKardia, Inc. (NASDAQ:MYOK). We will take a look at GrafTech International Ltd. (NYSE:EAF), Allakos Inc. (NASDAQ:ALLK), Cohen & Steers, Inc. (NYSE:CNS), and Rapid7 Inc (NASDAQ:RPD). This group of stocks’ market values match MYOK’s market value.
|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 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $562 million in MYOK’s case. GrafTech International Ltd. (NYSE:EAF) is the most popular stock in this table. On the other hand Allakos Inc. (NASDAQ:ALLK) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks MyoKardia, Inc. (NASDAQ:MYOK) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on MYOK as the stock returned 118.2% so far in Q2 (through the end of May) 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.
Disclosure: None. This article was originally published at Insider Monkey.