Where Do Hedge Funds Stand On Insmed Incorporated (INSM)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Insmed Incorporated (NASDAQ:INSM), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Insmed Incorporated (NASDAQ:INSM) investors should pay attention to a decrease in support from the world’s most elite money managers of late. Insmed Incorporated (NASDAQ:INSM) was in 22 hedge funds’ portfolios at the end of March. The all time high for this statistic is 32. Our calculations also showed that INSM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to go over the latest hedge fund action surrounding Insmed Incorporated (NASDAQ:INSM).

Do Hedge Funds Think INSM Is A Good Stock To Buy Now?

At first quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in INSM a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

The largest stake in Insmed Incorporated (NASDAQ:INSM) was held by Palo Alto Investors, which reported holding $198.4 million worth of stock at the end of December. It was followed by Point72 Asset Management with a $98 million position. Other investors bullish on the company included Baker Bros. Advisors, Holocene Advisors, and Polar Capital. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to Insmed Incorporated (NASDAQ:INSM), around 11.3% of its 13F portfolio. SilverArc Capital is also relatively very bullish on the stock, dishing out 3.54 percent of its 13F equity portfolio to INSM.

Due to the fact that Insmed Incorporated (NASDAQ:INSM) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there were a few funds that elected to cut their positions entirely heading into Q2. Intriguingly, Aaron Cowen’s Suvretta Capital Management cut the largest position of the “upper crust” of funds watched by Insider Monkey, comprising close to $11.2 million in stock. Kris Jenner, Gordon Bussard, Graham McPhail’s fund, Rock Springs Capital Management, also sold off its stock, about $6.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds heading into Q2.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Insmed Incorporated (NASDAQ:INSM) but similarly valued. We will take a look at Extended Stay America Inc (NYSE:STAY), FormFactor, Inc. (NASDAQ:FORM), ALLETE Inc (NYSE:ALE), Worthington Industries, Inc. (NYSE:WOR), Clearway Energy, Inc. (NYSE:CWEN), Karuna Therapeutics, Inc. (NASDAQ:KRTX), and Jumia Technologies AG (NYSE:JMIA). This group of stocks’ market caps match INSM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STAY 39 905852 16
FORM 17 156169 -1
ALE 16 94177 5
WOR 14 48616 6
CWEN 24 232260 2
KRTX 23 396412 6
JMIA 16 123790 3
Average 21.3 279611 5.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $280 million. That figure was $573 million in INSM’s case. Extended Stay America Inc (NYSE:STAY) is the most popular stock in this table. On the other hand Worthington Industries, Inc. (NYSE:WOR) is the least popular one with only 14 bullish hedge fund positions. Insmed Incorporated (NASDAQ:INSM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INSM is 35.6. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately INSM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on INSM were disappointed as the stock returned -21.7% since the end of March (through 7/16) 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.

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