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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Theravance Biopharma Inc (NASDAQ:TBPH).
Is Theravance Biopharma Inc (NASDAQ:TBPH) a buy here? Hedge funds are taking an optimistic view. The number of long hedge fund positions moved up by 1 lately. Our calculations also showed that TBPH 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). TBPH was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. There were 13 hedge funds in our database with TBPH holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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 we’re going to take a glance at the new hedge fund action regarding Theravance Biopharma Inc (NASDAQ:TBPH).
Hedge fund activity in Theravance Biopharma Inc (NASDAQ:TBPH)
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in TBPH a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Baupost Group, managed by Seth Klarman, holds the largest position in Theravance Biopharma Inc (NASDAQ:TBPH). Baupost Group has a $215.1 million position in the stock, comprising 3.2% of its 13F portfolio. Sitting at the No. 2 spot is Chescapmanager LLC, managed by Traci Lerner, which holds a $23.2 million position; 6% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism consist of Joseph Edelman’s Perceptive Advisors, David Rosen’s Rubric Capital Management and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Chescapmanager LLC allocated the biggest weight to Theravance Biopharma Inc (NASDAQ:TBPH), around 6% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, earmarking 3.19 percent of its 13F equity portfolio to TBPH.
Now, key money managers have jumped into Theravance Biopharma Inc (NASDAQ:TBPH) headfirst. Perceptive Advisors, managed by Joseph Edelman, created the biggest position in Theravance Biopharma Inc (NASDAQ:TBPH). Perceptive Advisors had $23.1 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $17.9 million position during the quarter. The other funds with brand new TBPH positions are Samuel Isaly’s OrbiMed Advisors, Greg Eisner’s Engineers Gate Manager, and D. E. Shaw’s D E Shaw.
Let’s now review hedge fund activity in other stocks similar to Theravance Biopharma Inc (NASDAQ:TBPH). These stocks are TransAlta Corporation (NYSE:TAC), Akcea Therapeutics, Inc. (NASDAQ:AKCA), Tootsie Roll Industries, Inc. (NYSE:TR), and Western Gas Partners, LP (NYSE:WES). This group of stocks’ market valuations are similar to TBPH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TAC | 15 | 55063 | 5 |
| AKCA | 11 | 11776 | 1 |
| TR | 14 | 68255 | -3 |
| WES | 12 | 27993 | -1 |
| Average | 13 | 40772 | 0.5 |
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 $41 million. That figure was $336 million in TBPH’s case. TransAlta Corporation (NYSE:TAC) is the most popular stock in this table. On the other hand Akcea Therapeutics, Inc. (NASDAQ:AKCA) is the least popular one with only 11 bullish hedge fund positions. Theravance Biopharma Inc (NASDAQ:TBPH) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately TBPH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TBPH were disappointed as the stock returned -6.4% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Follow Theravance Biopharma Inc. (NASDAQ:TBPH)
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Disclosure: None. This article was originally published at Insider Monkey.
