The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of Zymeworks Inc. (NYSE:ZYME).
Is Zymeworks Inc. (NYSE:ZYME) a buy here? Prominent investors were taking a bearish view. The number of long hedge fund bets dropped by 8 lately. Zymeworks Inc. (NYSE:ZYME) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 31. Our calculations also showed that ZYME isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 27 hedge funds in our database with ZYME holdings at the end of March.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Felix Baker of Baker Bros.
Keeping this in mind let’s review the fresh hedge fund action regarding Zymeworks Inc. (NYSE:ZYME).
Do Hedge Funds Think ZYME Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -30% from the first quarter of 2020. On the other hand, there were a total of 31 hedge funds with a bullish position in ZYME a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in Zymeworks Inc. (NYSE:ZYME) was held by 0, which reported holding $149.4 million worth of stock at the end of June. It was followed by Armistice Capital with a $69.4 million position. Other investors bullish on the company included Baker Bros. Advisors, Cormorant Asset Management, and Lone Pine Capital. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to Zymeworks Inc. (NYSE:ZYME), around 1.94% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, dishing out 1.56 percent of its 13F equity portfolio to ZYME.
Since Zymeworks Inc. (NYSE:ZYME) has witnessed a decline in interest from the smart money, it’s safe to say that there exists a select few funds that elected to cut their full holdings in the second quarter. It’s worth mentioning that Farallon Capital cut the biggest investment of all the hedgies tracked by Insider Monkey, totaling close to $18.9 million in stock. Michael Burry’s fund, Scion Asset Management, also dumped its stock, about $8.9 million worth. These transactions are interesting, as total hedge fund interest was cut by 8 funds in the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Zymeworks Inc. (NYSE:ZYME) but similarly valued. We will take a look at Enerpac Tool Group Corp. (NYSE:EPAC), Pulmonx Corporation (NASDAQ:LUNG), Usa Compression Partners LP (NYSE:USAC), Delek US Holdings, Inc. (NYSE:DK), Conduent Incorporated (NASDAQ:CNDT), Ocugen, Inc. (NASDAQ:OCGN), and G-III Apparel Group, Ltd. (NASDAQ:GIII). All of these stocks’ market caps are similar to ZYME’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EPAC | 7 | 117733 | 0 |
| LUNG | 20 | 264933 | -7 |
| USAC | 3 | 6103 | 1 |
| DK | 16 | 229538 | 3 |
| CNDT | 23 | 386854 | 1 |
| OCGN | 10 | 48887 | 4 |
| GIII | 17 | 99902 | 3 |
| Average | 13.7 | 164850 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $460 million in ZYME’s case. Conduent Incorporated (NASDAQ:CNDT) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 3 bullish hedge fund positions. Zymeworks Inc. (NYSE:ZYME) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZYME is 55.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately ZYME wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ZYME were disappointed as the stock returned -33.7% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.
Follow Zymeworks Bc Inc. (NYSE:ZYME)
Follow Zymeworks Bc Inc. (NYSE:ZYME)
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Disclosure: None. This article was originally published at Insider Monkey.
