The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Magenta Therapeutics, Inc. (NASDAQ:MGTA) based on those filings.
Is Magenta Therapeutics, Inc. (NASDAQ:MGTA) a healthy stock for your portfolio? Investors who are in the know are becoming more confident. The number of bullish hedge fund positions rose by 1 lately. Our calculations also showed that MGTA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s view the latest hedge fund action surrounding Magenta Therapeutics, Inc. (NASDAQ:MGTA).
Hedge fund activity in Magenta Therapeutics, Inc. (NASDAQ:MGTA)
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MGTA over the last 17 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Casdin Capital held the most valuable stake in Magenta Therapeutics, Inc. (NASDAQ:MGTA), which was worth $31.3 million at the end of the third quarter. On the second spot was Alkeon Capital Management which amassed $5.1 million worth of shares. Opaleye Management, Harvard Management Co, and Platinum Asset 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 Casdin Capital allocated the biggest weight to Magenta Therapeutics, Inc. (NASDAQ:MGTA), around 3.13% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, designating 1.43 percent of its 13F equity portfolio to MGTA.
As aggregate interest increased, specific money managers have jumped into Magenta Therapeutics, Inc. (NASDAQ:MGTA) headfirst. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, assembled the most outsized position in Magenta Therapeutics, Inc. (NASDAQ:MGTA). Algert Coldiron Investors had $0.1 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Magenta Therapeutics, Inc. (NASDAQ:MGTA). These stocks are Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI), RBB Bancorp (NASDAQ:RBB), American National BankShares Inc (NASDAQ:AMNB), and Insteel Industries Inc (NASDAQ:IIIN). This group of stocks’ market valuations match MGTA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ACBI | 14 | 64813 | 2 |
| RBB | 9 | 13681 | 4 |
| AMNB | 2 | 9232 | 0 |
| IIIN | 3 | 40438 | -3 |
| Average | 7 | 32041 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $50 million in MGTA’s case. Atlantic Capital Bancshares, Inc. (NASDAQ:ACBI) is the most popular stock in this table. On the other hand American National BankShares Inc (NASDAQ:AMNB) is the least popular one with only 2 bullish hedge fund positions. Magenta Therapeutics, Inc. (NASDAQ:MGTA) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MGTA as the stock returned 29% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
