Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Regenxbio Inc (NASDAQ:RGNX).
Is Regenxbio Inc (NASDAQ:RGNX) undervalued? Investors who are in the know are categorically becoming more confident. The number of bullish hedge fund positions advanced by 2 recently. RGNX was in 13 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with RGNX positions at the end of the previous quarter. At the end of this article we will also compare RGNX to other stocks including U.S. Lime & Minerals Inc. (NASDAQ:USLM), Videocon d2h Ltd – ADR (NASDAQ:VDTH), and United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What does the smart money think about Regenxbio Inc (NASDAQ:RGNX)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, up by 18% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards RGNX over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Bain Capital’s Brookside Capital has the number one position in Regenxbio Inc (NASDAQ:RGNX), worth close to $34.6 million, accounting for 2.2% of its total 13F portfolio. Coming in second is Perceptive Advisors, led by Joseph Edelman, holding a $18 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other peers that are bullish include Israel Englander’s Millennium Management, and Daniel Gold’s QVT Financial. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds were breaking ground themselves. Partner Fund Management, led by Christopher James, initiated the largest position in Regenxbio Inc (NASDAQ:RGNX). Partner Fund Management had $4 million invested in the company at the end of the quarter. Vishal Saluja and Pham Quang’s Endurant Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a brand new RGNX position is Ken Griffin’s Citadel Investment Group.
Let’s check out hedge fund activity in other stocks similar to Regenxbio Inc (NASDAQ:RGNX). We will take a look at U.S. Lime & Minerals Inc. (NASDAQ:USLM), Videocon d2h Ltd – ADR (NASDAQ:VDTH), United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), and VSE Corporation (NASDAQ:VSEC). This group of stocks’ market values resemble RGNX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| USLM | 4 | 18637 | -1 |
| VDTH | 11 | 99748 | -3 |
| UIHC | 15 | 30406 | 5 |
| VSEC | 3 | 4333 | 0 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $81 million in RGNX’s case. United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC) is the most popular stock in this table. On the other hand VSE Corporation (NASDAQ:VSEC) is the least popular one with only 3 bullish hedge fund positions. Regenxbio Inc (NASDAQ:RGNX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard UIHC might be a better candidate to consider taking a long position in.
Disclosure: None
