Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) from the perspective of those elite funds.
NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. NGM was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. There were 10 hedge funds in our database with NGM holdings at the end of the previous quarter. Our calculations also showed that NGM 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Kris Jenner of Rock Springs Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the fresh hedge fund action surrounding NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).
How have hedgies been trading NGM Biopharmaceuticals, Inc. (NASDAQ:NGM)?
At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards NGM over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Rock Springs Capital Management, managed by Kris Jenner, Gordon Bussard, Graham McPhail, holds the biggest position in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). Rock Springs Capital Management has a $4.9 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Jasper Ridge Partners, led by Mark Wolfson and Jamie Alexander, holding a $4.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions encompass Arthur B Cohen and Joseph Healey’s Healthcor Management, Julian Baker and Felix Baker’s Baker Bros. Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Jasper Ridge Partners allocated the biggest weight to NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), around 0.25% of its 13F portfolio. Rock Springs Capital Management is also relatively very bullish on the stock, earmarking 0.19 percent of its 13F equity portfolio to NGM.
Due to the fact that NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) has witnessed bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Oleg Nodelman’s EcoR1 Capital dumped the largest investment of the 750 funds monitored by Insider Monkey, comprising about $4.6 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also sold off its stock, about $1.7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). These stocks are ProPetro Holding Corp. (NYSE:PUMP), Hyster-Yale Materials Handling Inc (NYSE:HY), Republic Bancorp, Inc. KY (NASDAQ:RBCAA), and The Gorman-Rupp Company (NYSE:GRC). This group of stocks’ market valuations are similar to NGM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PUMP | 22 | 152253 | -2 |
| HY | 14 | 33412 | 2 |
| RBCAA | 7 | 15262 | 1 |
| GRC | 9 | 43037 | 2 |
| Average | 13 | 60991 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $19 million in NGM’s case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 7 bullish hedge fund positions. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is not the least popular stock in this group but hedge fund interest is still below 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. A small number of hedge funds were also right about betting on NGM as the stock returned 19% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
