We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) in this article.
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) shareholders have witnessed an increase in hedge fund interest recently. IONS was in 27 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 26 hedge funds in our database with IONS positions at the end of the previous quarter. Our calculations also showed that IONS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In the 21st century investor’s toolkit there are plenty of signals stock market investors employ to assess publicly traded companies. Some of the most innovative signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outclass their index-focused peers by a significant margin (see the details here).
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the fresh hedge fund action surrounding Ionis Pharmaceuticals, Inc. (NASDAQ:IONS).
How are hedge funds trading Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)?
At the end of the fourth quarter, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in IONS over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, holds the number one position in Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). Biotechnology Value Fund / BVF Inc has a $131.7 million position in the stock, comprising 10% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, founded by Jim Simons, holding a $123.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), around 9.98% of its 13F portfolio. Sabby Capital is also relatively very bullish on the stock, setting aside 4.96 percent of its 13F equity portfolio to IONS.
Consequently, key money managers have been driving this bullishness. OrbiMed Advisors, managed by Samuel Isaly, established the most valuable position in Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). OrbiMed Advisors had $6.5 million invested in the company at the end of the quarter. Highbridge Capital Management also made a $5.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Nathan Przybylo’s L2 Asset Management, Sander Gerber’s Hudson Bay Capital Management, and Minhua Zhang’s Weld Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) but similarly valued. We will take a look at Pool Corporation (NASDAQ:POOL), The Toro Company (NYSE:TTC), F5 Networks, Inc. (NASDAQ:FFIV), and Masimo Corporation (NASDAQ:MASI). All of these stocks’ market caps are closest to IONS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| POOL | 28 | 445007 | -2 |
| TTC | 23 | 773670 | 2 |
| FFIV | 29 | 1184887 | 4 |
| MASI | 30 | 171518 | 1 |
| Average | 27.5 | 643771 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.5 hedge funds with bullish positions and the average amount invested in these stocks was $644 million. That figure was $444 million in IONS’s case. Masimo Corporation (NASDAQ:MASI) is the most popular stock in this table. On the other hand The Toro Company (NYSE:TTC) is the least popular one with only 23 bullish hedge fund positions. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately IONS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IONS investors were disappointed as the stock returned -28.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
