We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money 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 (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards PTC Therapeutics, Inc. (NASDAQ:PTCT).
PTC Therapeutics, Inc. (NASDAQ:PTCT) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 23 hedge funds’ portfolios at the end of September. Our calculations also showed that PTCT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Boot Barn Holdings Inc (NYSE:BOOT), 8×8, Inc. (NASDAQ:EGHT), and Sinopec Shanghai Petrochemical Co. (NYSE:SHI) to gather more data points.
Roger Ibbotson of Zebra Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a peek at the recent hedge fund action surrounding PTC Therapeutics, Inc. (NASDAQ:PTCT).
Do Hedge Funds Think PTCT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2021. By comparison, 25 hedge funds held shares or bullish call options in PTCT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PTC Therapeutics, Inc. (NASDAQ:PTCT) was held by Armistice Capital, which reported holding $96.6 million worth of stock at the end of September. It was followed by D E Shaw with a $44.6 million position. Other investors bullish on the company included Camber Capital Management, Woodline Partners, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to PTC Therapeutics, Inc. (NASDAQ:PTCT), around 1.64% of its 13F portfolio. Integral Health Asset Management is also relatively very bullish on the stock, setting aside 1.04 percent of its 13F equity portfolio to PTCT.
Judging by the fact that PTC Therapeutics, Inc. (NASDAQ:PTCT) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors sold off the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $2.5 million in call options. Ken Griffin’s fund, Citadel Investment Group, also cut its call options, about $1.3 million worth. These bearish behaviors 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 take a look at hedge fund activity in other stocks similar to PTC Therapeutics, Inc. (NASDAQ:PTCT). We will take a look at Boot Barn Holdings Inc (NYSE:BOOT), 8×8, Inc. (NASDAQ:EGHT), Sinopec Shanghai Petrochemical Co. (NYSE:SHI), The Duckhorn Portfolio, Inc. (NYSE:NAPA), Hippo Holdings Inc. (NYSE:HIPO), Valaris Plc (NYSE:VAL), and Sunstone Hotel Investors Inc (NYSE:SHO). This group of stocks’ market values are closest to PTCT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BOOT | 28 | 246514 | -1 |
| EGHT | 27 | 787115 | -2 |
| SHI | 3 | 13756 | -2 |
| NAPA | 8 | 158134 | -8 |
| HIPO | 23 | 88135 | 23 |
| VAL | 26 | 1059546 | -3 |
| SHO | 23 | 136845 | 5 |
| Average | 19.7 | 355721 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $256 million in PTCT’s case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Co. (NYSE:SHI) is the least popular one with only 3 bullish hedge fund positions. PTC Therapeutics, Inc. (NASDAQ:PTCT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PTCT is 64.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately PTCT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PTCT were disappointed as the stock returned -3.4% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Ptc Therapeutics Inc. (NASDAQ:PTCT)
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Disclosure: None. This article was originally published at Insider Monkey.
