Where Do Hedge Funds Stand On PMV Pharmaceuticals, Inc. (PMVP)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards PMV Pharmaceuticals, Inc. (NASDAQ:PMVP) changed recently.

Hedge fund interest in PMV Pharmaceuticals, Inc. (NASDAQ:PMVP) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that PMVP isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 Establishment Labs Holdings Inc. (NASDAQ:ESTA), AAR Corp. (NYSE:AIR), and Hyster-Yale Materials Handling Inc (NYSE:HY) to gather more data points.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Peter Kolchinsky of RA Capital Management

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. Now we’re going to take a look at the latest hedge fund action regarding PMV Pharmaceuticals, Inc. (NASDAQ:PMVP).

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

Heading into the second quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PMVP over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PMVP A Good Stock To Buy?

Among these funds, OrbiMed Advisors held the most valuable stake in PMV Pharmaceuticals, Inc. (NASDAQ:PMVP), which was worth $241.1 million at the end of the fourth quarter. On the second spot was Euclidean Capital which amassed $137.5 million worth of shares. Avoro Capital Advisors (venBio Select Advisor), Viking Global, and RA Capital Management 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 Euclidean Capital allocated the biggest weight to PMV Pharmaceuticals, Inc. (NASDAQ:PMVP), around 45.99% of its 13F portfolio. Octagon Capital Advisors is also relatively very bullish on the stock, dishing out 3.1 percent of its 13F equity portfolio to PMVP.

Since PMV Pharmaceuticals, Inc. (NASDAQ:PMVP) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there was a specific group of fund managers who sold off their entire stakes last quarter. Interestingly, D. E. Shaw’s D E Shaw dropped the biggest position of the 750 funds followed by Insider Monkey, worth about $1.8 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as PMV Pharmaceuticals, Inc. (NASDAQ:PMVP) but similarly valued. We will take a look at Establishment Labs Holdings Inc. (NASDAQ:ESTA), AAR Corp. (NYSE:AIR), Hyster-Yale Materials Handling Inc (NYSE:HY), Groupon Inc (NASDAQ:GRPN), CSG Systems International, Inc. (NASDAQ:CSGS), Studio City International Holdings Limited (NYSE:MSC), and DermTech, Inc. (NASDAQ:DMTK). All of these stocks’ market caps are similar to PMVP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESTA 13 276217 -1
AIR 20 150229 5
HY 12 91388 2
GRPN 25 376177 -1
CSGS 23 141997 1
MSC 3 226997 0
DMTK 18 303148 4
Average 16.3 223736 1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $224 million. That figure was $698 million in PMVP’s case. Groupon Inc (NASDAQ:GRPN) is the most popular stock in this table. On the other hand Studio City International Holdings Limited (NYSE:MSC) is the least popular one with only 3 bullish hedge fund positions. PMV Pharmaceuticals, Inc. (NASDAQ:PMVP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PMVP is 75.9. 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 PMVP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PMVP were disappointed as the stock returned 2.2% 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.