Protagonist Therapeutics, Inc. (PTGX): Are Hedge Funds Right About This Stock?

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. What do these smart investors think about Protagonist Therapeutics, Inc. (NASDAQ:PTGX)?

Is Protagonist Therapeutics, Inc. (NASDAQ:PTGX) the right investment to pursue these days? The smart money is in a bearish mood. The number of bullish hedge fund bets went down by 2 recently. Our calculations also showed that PTGX 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). PTGX was in 15 hedge funds’ portfolios at the end of the first quarter of 2020. There were 17 hedge funds in our database with PTGX positions at the end of the previous quarter.

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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind we’re going to take a look at the fresh hedge fund action surrounding Protagonist Therapeutics, Inc. (NASDAQ:PTGX).

Hedge fund activity in Protagonist Therapeutics, Inc. (NASDAQ:PTGX)

Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PTGX over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Among these funds, Baker Bros. Advisors held the most valuable stake in Protagonist Therapeutics, Inc. (NASDAQ:PTGX), which was worth $11.9 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $10.6 million worth of shares. Biotechnology Value Fund / BVF Inc, Renaissance Technologies, and Sphera Global Healthcare Fund 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 Sphera Global Healthcare Fund allocated the biggest weight to Protagonist Therapeutics, Inc. (NASDAQ:PTGX), around 0.46% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, designating 0.46 percent of its 13F equity portfolio to PTGX.

Judging by the fact that Protagonist Therapeutics, Inc. (NASDAQ:PTGX) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few money managers that decided to sell off their full holdings in the first quarter. Interestingly, Minhua Zhang’s Weld Capital Management sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $0.2 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $0.1 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Protagonist Therapeutics, Inc. (NASDAQ:PTGX). These stocks are Recro Pharma Inc (NASDAQ:REPH), Natural Grocers by Vitamin Cottage Inc (NYSE:NGVC), ORBCOMM Inc (NASDAQ:ORBC), and Trilogy Metals Inc. (NYSE:TMQ). This group of stocks’ market valuations resemble PTGX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
REPH 11 40930 -6
NGVC 9 15433 -1
ORBC 18 43349 1
TMQ 7 45140 -5
Average 11.25 36213 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $48 million in PTGX’s case. ORBCOMM Inc (NASDAQ:ORBC) is the most popular stock in this table. On the other hand Trilogy Metals Inc. (NYSE:TMQ) is the least popular one with only 7 bullish hedge fund positions. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on PTGX as the stock returned 166.9% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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