Hedge Funds Are Coming Back to Seattle Genetics, Inc. (SGEN)

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Seattle Genetics, Inc. (NASDAQ:SGEN) from the perspective of those elite funds.

Seattle Genetics, Inc. (NASDAQ:SGEN) was in 23 hedge funds’ portfolios at the end of September. SGEN investors should be aware of an increase in hedge fund interest recently. There were 20 hedge funds in our database with SGEN holdings at the end of the previous quarter. At the end of this article we will also compare SGEN to other stocks including Genpact Limited (NYSE:G), CF Industries Holdings, Inc. (NYSE:CF), and China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) to get a better sense of its popularity.

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How have hedgies been trading Seattle Genetics, Inc. (NASDAQ:SGEN)?

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a jump of 15% from the second quarter of 2016, pushing hedge fund ownership to a yearly high. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the biggest position in Seattle Genetics, Inc. (NASDAQ:SGEN). According to regulatory filings, the fund has a $2.38 billion position in the stock, comprising 21.6% of its 13F portfolio. On Baker Bros. Advisors’ heels is Redmile Group, led by Jeremy Green, holding a $96.2 million position; the fund has 7.7% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise Ken Griffin’s Citadel Investment Group, Dmitry Balyasny’s Balyasny Asset Management, and D E Shaw.

As industry-wide interest surged, some big names have jumped into Seattle Genetics, Inc. (NASDAQ:SGEN) headfirst. venBio Select Advisor, managed by Behzad Aghazadeh, created the most valuable position in Seattle Genetics, Inc. (NASDAQ:SGEN). According to its latest 13F filing, the fund had $7.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $6.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Noam Gottesman’s GLG Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Seattle Genetics, Inc. (NASDAQ:SGEN) but similarly valued. We will take a look at Genpact Limited (NYSE:G), CF Industries Holdings, Inc. (NYSE:CF), China Southern Airlines Co Ltd (ADR) (NYSE:ZNH), and Westlake Chemical Corporation (NYSE:WLK). All of these stocks’ market caps resemble SGEN’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $503 million. That figure was a whooping $2.63 billion in SGEN’s case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (ADR) (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. Seattle Genetics, Inc. (NASDAQ:SGEN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CF might be a better candidate to consider taking a long position in.

Disclosure: None