Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) to find out whether there were any major changes in hedge funds’ views.
NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) investors should be aware of an increase in hedge fund sentiment lately. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NGM isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In today’s marketplace there are dozens of metrics stock traders put to use to size up stocks. A couple of the best metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
With all of this in mind let’s review the key hedge fund action surrounding NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).
Do Hedge Funds Think NGM Is A Good Stock To Buy Now?
At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NGM over the last 24 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.
Among these funds, Redmile Group held the most valuable stake in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), which was worth $55.1 million at the end of the second quarter. On the second spot was Greenspring Associates which amassed $31 million worth of shares. Euclidean Capital, Aquilo Capital Management, and Biotechnology Value Fund / BVF Inc were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Euclidean Capital allocated the biggest weight to NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), around 6.88% of its 13F portfolio. Aquilo Capital Management is also relatively very bullish on the stock, dishing out 6.12 percent of its 13F equity portfolio to NGM.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, initiated the largest position in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). Biotechnology Value Fund / BVF Inc had $18.8 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $0.7 million position during the quarter. The following funds were also among the new NGM investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) but similarly valued. We will take a look at istar Inc (NYSE:STAR), BP Midstream Partners LP (NYSE:BPMP), LTC Properties Inc (NYSE:LTC), Ichor Holdings Ltd. (NASDAQ:ICHR), Krystal Biotech, Inc. (NASDAQ:KRYS), AMTD International Inc. (NYSE:HKIB), and PLBY Group, Inc. (NASDAQ:PLBY). This group of stocks’ market caps resemble NGM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STAR | 18 | 180477 | -4 |
| BPMP | 6 | 10972 | 1 |
| LTC | 10 | 8977 | 3 |
| ICHR | 20 | 88964 | 8 |
| KRYS | 9 | 275447 | 1 |
| HKIB | 1 | 7086 | -1 |
| PLBY | 20 | 136557 | 7 |
| Average | 12 | 101211 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $213 million in NGM’s case. Ichor Holdings Ltd. (NASDAQ:ICHR) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NGM is 83.4. 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 NGM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NGM were disappointed as the stock returned -2.5% 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.
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Disclosure: None. This article was originally published at Insider Monkey.
