What Do Hedge Funds Think of Novavax, Inc. (NVAX)?

A market correction in the third quarter, spurred by a number of global macroeconomic concerns ended up having a negative impact on the markets and many hedge funds as a result. The stocks of smaller companies were especially hard hit during this time as investors fled to investments seen as being safer. This is evident in the fact that the Russell 2000 ETF underperformed the S&P 500 ETF by 14 percentage points between June 25 and the end of October. We also received indications that hedge funds were trimming their positions amid the market volatility and uncertainty, and given their greater inclination towards smaller cap stocks than other investors, it follows that a stronger sell-off occurred in those stocks. Let’s study the hedge fund sentiment to see how those concerns affected their ownership of Novavax, Inc. (NASDAQ:NVAX) during the quarter.

Novavax, Inc. (NASDAQ:NVAX) investors should be aware of an increase in support from the world’s most elite money managers of late. NVAX was in 24 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with NVAX positions at the end of the previous quarter. At the end of this article we will also compare NVAX to other stocks including The Ryland Group, Inc. (NYSE:RYL), Lexington Realty Trust (NYSE:LXP), and GATX Corporation (NYSE:GMT) to get a better sense of its popularity.

To the average investor there are numerous metrics market participants have at their disposal to assess publicly traded companies. A duo of the less known metrics are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top investment managers can outpace the market by a healthy amount (see the details here).

With all of this in mind, let’s analyze the new action encompassing Novavax, Inc. (NASDAQ:NVAX).

What does the smart money think about Novavax, Inc. (NASDAQ:NVAX)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 41% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the biggest position in Novavax, Inc. (NASDAQ:NVAX). Baker Bros. Advisors has a $15.5 million position in the stock, comprising 0.1% of its 13F portfolio. On Baker Bros. Advisors’s heels is Millennium Management, managed by Israel Englander, which holds a $14.1 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions encompass Jim Simons’ Renaissance Technologies, Bihua Chen’s Cormorant Asset Management and D E Shaw.

Now, specific money managers were breaking ground themselves. Deerfield Management, managed by James E. Flynn, established the biggest position in Novavax, Inc. (NASDAQ:NVAX). Deerfield Management had $7.4 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also made a $3.7 million investment in the stock during the quarter. The following funds were also among the new NVAX investors: David Costen Haley’s HBK Investments, Chao Ku’s Nine Chapters Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s now review hedge fund activity in other stocks similar to Novavax, Inc. (NASDAQ:NVAX). We will take a look at The Ryland Group, Inc. (NYSE:RYL), Lexington Realty Trust (NYSE:LXP), GATX Corporation (NYSE:GMT), and Balchem Corporation (NASDAQ:BCPC). This group of stocks’ market valuations resemble NVAX’s market valuation.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $225 million. That figure was $101 million in NVAX’s case. The Ryland Group, Inc. (NYSE:RYL) is the most popular stock in this table. On the other hand Balchem Corporation (NASDAQ:BCPC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Novavax, Inc. (NASDAQ:NVAX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.