As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Ascendis Pharma A/S (NASDAQ:ASND).
Ascendis Pharma A/S (NASDAQ:ASND) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 38. ASND has experienced a decrease in support from the world’s most elite money managers of late. There were 29 hedge funds in our database with ASND holdings at the end of June. Our calculations also showed that ASND isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Felix Baker of Baker Bros.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a gander at the new hedge fund action encompassing Ascendis Pharma A/S (NASDAQ:ASND).
Do Hedge Funds Think ASND Is A Good Stock To Buy Now?
At the end of September, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards ASND over the last 25 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, RA Capital Management, managed by Peter Kolchinsky, holds the largest position in Ascendis Pharma A/S (NASDAQ:ASND). RA Capital Management has a $1.1776 billion position in the stock, comprising 16.3% of its 13F portfolio. On RA Capital Management’s heels is Julian Baker and Felix Baker of Baker Bros. Advisors, with a $723.9 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism consist of Behzad Aghazadeh’s Avoro Capital Advisors (venBio Select Advisor), Lone Pine Capital and Albert Cha and Frank Kung’s Vivo Capital. In terms of the portfolio weights assigned to each position RA Capital Management allocated the biggest weight to Ascendis Pharma A/S (NASDAQ:ASND), around 16.32% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, earmarking 5.59 percent of its 13F equity portfolio to ASND.
Because Ascendis Pharma A/S (NASDAQ:ASND) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers who were dropping their positions entirely in the third quarter. It’s worth mentioning that OrbiMed Advisors sold off the largest position of all the hedgies monitored by Insider Monkey, totaling close to $58.9 million in stock, and Farallon Capital was right behind this move, as the fund said goodbye to about $49.3 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Ascendis Pharma A/S (NASDAQ:ASND). These stocks are Globe Life Inc. (NYSE:GL), Syneos Health, Inc. (NASDAQ:SYNH), Reliance Steel & Aluminum Co. (NYSE:RS), GXO Logistics Inc. (NYSE:GXO), Crocs, Inc. (NASDAQ:CROX), First Horizon National Corporation (NYSE:FHN), and Juniper Networks, Inc. (NYSE:JNPR). This group of stocks’ market valuations resemble ASND’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GL | 27 | 775771 | -1 |
| SYNH | 33 | 474708 | 0 |
| RS | 24 | 346919 | -3 |
| GXO | 27 | 1313274 | 27 |
| CROX | 37 | 1051423 | -3 |
| FHN | 24 | 103547 | -3 |
| JNPR | 26 | 288397 | -1 |
| Average | 28.3 | 622006 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $622 million. That figure was $2828 million in ASND’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Reliance Steel & Aluminum Co. (NYSE:RS) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Ascendis Pharma A/S (NASDAQ:ASND) is even less popular than RS. Our overall hedge fund sentiment score for ASND is 17.2. 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. Hedge funds dodged a bullet by taking a bearish stance towards ASND. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th but managed to beat the market again by 5.1 percentage points. Unfortunately ASND wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); ASND investors were disappointed as the stock returned -12.4% since the end of the third quarter (through 12/9) 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 since 2019.
Follow Ascendis Pharma A/S (NASDAQ:ASND)
Follow Ascendis Pharma A/S (NASDAQ:ASND)
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Disclosure: None. This article was originally published at Insider Monkey.
