Annexon, Inc. (ANNX): Hedge Fund Sentiment Unchanged

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Annexon, Inc. (NASDAQ:ANNX).

Annexon, Inc. (NASDAQ:ANNX) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that ANNX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 Helix Energy Solutions Group Inc. (NYSE:HLX), Trillium Therapeutics Inc. (NASDAQ:TRIL), and Associated Capital Group, Inc. (NYSE:AC) to gather more data points.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

James E. Flynn of Deerfield Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 go over the key hedge fund action encompassing Annexon, Inc. (NASDAQ:ANNX).

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

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ANNX over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jeremy Green’s Redmile Group has the most valuable position in Annexon, Inc. (NASDAQ:ANNX), worth close to $77.1 million, accounting for 1.1% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $44.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions contain Farallon Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and James E. Flynn’s Deerfield Management. In terms of the portfolio weights assigned to each position Redmile Group allocated the biggest weight to Annexon, Inc. (NASDAQ:ANNX), around 1.14% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, designating 0.38 percent of its 13F equity portfolio to ANNX.

Since Annexon, Inc. (NASDAQ:ANNX) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of hedgies that slashed their entire stakes in the second quarter. Intriguingly, Brandon Haley’s Holocene Advisors dropped the biggest investment of the 750 funds followed by Insider Monkey, comprising about $7.9 million in stock, and Benjamin A. Smith’s Laurion Capital Management was right behind this move, as the fund dropped about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Annexon, Inc. (NASDAQ:ANNX). We will take a look at Helix Energy Solutions Group Inc. (NYSE:HLX), Trillium Therapeutics Inc. (NASDAQ:TRIL), Associated Capital Group, Inc. (NYSE:AC), U.S. Silica Holdings Inc (NYSE:SLCA), Sutro Biopharma, Inc. (NASDAQ:STRO), Modine Manufacturing Company (NYSE:MOD), and Liquidity Services, Inc. (NASDAQ:LQDT). All of these stocks’ market caps resemble ANNX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $210 million in ANNX’s case. Sutro Biopharma, Inc. (NASDAQ:STRO) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 4 bullish hedge fund positions. Annexon, Inc. (NASDAQ:ANNX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ANNX is 45.9. 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 negative signal and 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately ANNX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ANNX investors were disappointed as the stock returned -0.8% since the end of June (through 9/27) 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 most of these stocks already outperformed the market in 2021.

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