We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Myovant Sciences Ltd. (NYSE:MYOV) and determine whether hedge funds skillfully traded this stock.
Myovant Sciences Ltd. (NYSE:MYOV) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the first quarter of 2020. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Limelight Networks, Inc. (NASDAQ:LLNW), The Buckle, Inc. (NYSE:BKE), and Vocera Communications Inc (NYSE:VCRA) to gather more data points. Our calculations also showed that MYOV 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.
According to most stock holders, hedge funds are assumed to be unimportant, outdated investment vehicles of the past. While there are over 8000 funds trading today, Our experts choose to focus on the masters of this group, around 850 funds. These investment experts preside over bulk of the smart money’s total capital, and by paying attention to their finest stock picks, Insider Monkey has unsheathed a number of investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually 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 .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. Now let’s view the key hedge fund action regarding Myovant Sciences Ltd. (NYSE:MYOV).
What does smart money think about Myovant Sciences Ltd. (NYSE:MYOV)?
At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MYOV over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cormorant Asset Management was the largest shareholder of Myovant Sciences Ltd. (NYSE:MYOV), with a stake worth $19.6 million reported as of the end of September. Trailing Cormorant Asset Management was Opaleye Management, which amassed a stake valued at $5 million. Ghost Tree Capital, Rock Springs Capital Management, and Ikarian Capital 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 Opaleye Management allocated the biggest weight to Myovant Sciences Ltd. (NYSE:MYOV), around 1.31% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, earmarking 1.17 percent of its 13F equity portfolio to MYOV.
Seeing as Myovant Sciences Ltd. (NYSE:MYOV) has experienced declining sentiment from the smart money, it’s safe to say that there was a specific group of funds that decided to sell off their entire stakes last quarter. Interestingly, Phill Gross and Robert Atchinson’s Adage Capital Management dumped the largest investment of all the hedgies followed by Insider Monkey, valued at close to $7.8 million in stock. Israel Englander’s fund, Millennium Management, also said goodbye to its stock, about $5.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Myovant Sciences Ltd. (NYSE:MYOV). We will take a look at Limelight Networks, Inc. (NASDAQ:LLNW), The Buckle, Inc. (NYSE:BKE), Vocera Communications Inc (NYSE:VCRA), and American Finance Trust, Inc. (NASDAQ:AFIN). This group of stocks’ market values resemble MYOV’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 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $42 million in MYOV’s case. Limelight Networks, Inc. (NASDAQ:LLNW) is the most popular stock in this table. On the other hand American Finance Trust, Inc. (NASDAQ:AFIN) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Myovant Sciences Ltd. (NYSE:MYOV) is even less popular than AFIN. Hedge funds clearly dropped the ball on MYOV 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on MYOV as the stock returned 173.1% in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.