The fourth quarter was a rough one for most investors, as fears of a rising interest rate environment in the U.S, a trade war with China, and a more or less stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Amicus Therapeutics, Inc. (NASDAQ:FOLD), and what that likely means for the prospects of the company and its stock.
Amicus Therapeutics, Inc. (NASDAQ:FOLD) has experienced an increase in support from the world’s most elite money managers lately. Our calculations also showed that FOLD isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
Let’s go over the latest hedge fund action encompassing Amicus Therapeutics, Inc. (NASDAQ:FOLD).
How have hedgies been trading Amicus Therapeutics, Inc. (NASDAQ:FOLD)?
Heading into the fourth quarter of 2018, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in FOLD at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Amicus Therapeutics, Inc. (NASDAQ:FOLD) was held by Perceptive Advisors, which reported holding $250.2 million worth of stock at the end of September. It was followed by venBio Select Advisor with a $112.8 million position. Other investors bullish on the company included Redmile Group, Palo Alto Investors, and Sectoral Asset Management.
Consequently, specific money managers have jumped into Amicus Therapeutics, Inc. (NASDAQ:FOLD) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in Amicus Therapeutics, Inc. (NASDAQ:FOLD). Marshall Wace LLP had $14.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $1.8 million investment in the stock during the quarter. The following funds were also among the new FOLD investors: Peter Muller’s PDT Partners, John W. Rende’s Copernicus Capital Management, and Kamran Moghtaderi’s Eversept Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Amicus Therapeutics, Inc. (NASDAQ:FOLD) but similarly valued. We will take a look at Brady Corp (NYSE:BRC), Herman Miller, Inc. (NASDAQ:MLHR), Jack in the Box Inc. (NASDAQ:JACK), and Trustmark Corp (NASDAQ:TRMK). All of these stocks’ market caps match FOLD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BRC | 17 | 241260 | -2 |
| MLHR | 20 | 135326 | 4 |
| JACK | 26 | 479638 | 4 |
| TRMK | 11 | 32436 | 1 |
| Average | 18.5 | 222165 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $762 million in FOLD’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Amicus Therapeutics, Inc. (NASDAQ:FOLD) 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.
Disclosure: None. This article was originally published at Insider Monkey.
