At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards NanoString Technologies Inc (NASDAQ:NSTG).
Is NanoString Technologies Inc (NASDAQ:NSTG) a first-rate investment right now? Prominent investors are becoming hopeful. The number of long hedge fund bets improved by 3 in recent months. Our calculations also showed that NSTG isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). NSTG was in 18 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with NSTG positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the 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 peek at the recent hedge fund action encompassing NanoString Technologies Inc (NASDAQ:NSTG).
What have hedge funds been doing with NanoString Technologies Inc (NASDAQ:NSTG)?
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in NSTG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of NanoString Technologies Inc (NASDAQ:NSTG), with a stake worth $28.7 million reported as of the end of September. Trailing OrbiMed Advisors was Polar Capital, which amassed a stake valued at $23.3 million. Pura Vida Investments, D E Shaw, and Balyasny Asset Management 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 Pura Vida Investments allocated the biggest weight to NanoString Technologies Inc (NASDAQ:NSTG), around 5.58% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, earmarking 0.87 percent of its 13F equity portfolio to NSTG.
As aggregate interest increased, key hedge funds have been driving this bullishness. OrbiMed Advisors, managed by Samuel Isaly, assembled the biggest position in NanoString Technologies Inc (NASDAQ:NSTG). OrbiMed Advisors had $28.7 million invested in the company at the end of the quarter. Andrew Sandler’s Sandler Capital Management also made a $6.3 million investment in the stock during the quarter. The other funds with brand new NSTG positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Constantinos J. Christofilis’s Archon Capital Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s now review hedge fund activity in other stocks similar to NanoString Technologies Inc (NASDAQ:NSTG). These stocks are Skyline Champion Corporation (NYSE:SKY), Sturm, Ruger & Company (NYSE:RGR), Service Properties Trust (NASDAQ:SVC), and Odonate Therapeutics, Inc. (NASDAQ:ODT). This group of stocks’ market valuations resemble NSTG’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SKY | 23 | 143480 | -3 |
| RGR | 14 | 102980 | 2 |
| SVC | 23 | 30778 | 6 |
| ODT | 13 | 471188 | -2 |
| Average | 18.25 | 187107 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $119 million in NSTG’s case. Skyline Champion Corporation (NYSE:SKY) is the most popular stock in this table. On the other hand Odonate Therapeutics, Inc. (NASDAQ:ODT) is the least popular one with only 13 bullish hedge fund positions. NanoString Technologies Inc (NASDAQ:NSTG) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on NSTG as the stock returned 40.3% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
