Is MyoKardia, Inc. (NASDAQ:MYOK) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
MyoKardia, Inc. (NASDAQ:MYOK) investors should pay attention to an increase in hedge fund sentiment in recent months. MYOK was in 22 hedge funds’ portfolios at the end of the third quarter of 2018. There were 20 hedge funds in our database with MYOK positions at the end of the previous quarter. Our calculations also showed that MYOK 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’ 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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the recent hedge fund action regarding MyoKardia, Inc. (NASDAQ:MYOK).
What have hedge funds been doing with MyoKardia, Inc. (NASDAQ:MYOK)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards MYOK over the last 13 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Partner Fund Management was the largest shareholder of MyoKardia, Inc. (NASDAQ:MYOK), with a stake worth $122.5 million reported as of the end of September. Trailing Partner Fund Management was Farallon Capital, which amassed a stake valued at $99.8 million. Perceptive Advisors, Deerfield Management, and Hillhouse Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers have jumped into MyoKardia, Inc. (NASDAQ:MYOK) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, initiated the largest position in MyoKardia, Inc. (NASDAQ:MYOK). Polar Capital had $6 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $0.4 million position during the quarter. The only other fund with a brand new MYOK position is Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as MyoKardia, Inc. (NASDAQ:MYOK) but similarly valued. These stocks are The Descartes Systems Group Inc (NASDAQ:DSGX), ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD), AMN Healthcare Services Inc (NYSE:AMN), and First Trust NASDAQ-100-Tech Sector ETF (NASDAQ:QTEC). This group of stocks’ market caps resemble MYOK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DSGX | 9 | 84748 | 2 |
| ACAD | 19 | 809984 | 1 |
| AMN | 15 | 50566 | 5 |
| QTEC | 2 | 761 | 1 |
| Average | 11.25 | 236515 | 2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $237 million. That figure was $670 million in MYOK’s case. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is the most popular stock in this table. On the other hand First Trust NASDAQ-100-Tech Sector ETF (NASDAQ:QTEC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks MyoKardia, Inc. (NASDAQ:MYOK) 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.
