Is MeiraGTx Holdings plc (NASDAQ:MGTX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is MeiraGTx Holdings plc (NASDAQ:MGTX) the right pick for your portfolio? The smart money is becoming hopeful. The number of bullish hedge fund bets rose by 4 in recent months. Our calculations also showed that MGTX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MGTX was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with MGTX positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Samuel Isaly of OrbiMed Advisors
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. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the fresh hedge fund action encompassing MeiraGTx Holdings plc (NASDAQ:MGTX).
What does smart money think about MeiraGTx Holdings plc (NASDAQ:MGTX)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 44% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in MGTX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in MeiraGTx Holdings plc (NASDAQ:MGTX) was held by Perceptive Advisors, which reported holding $102.6 million worth of stock at the end of September. It was followed by OrbiMed Advisors with a $53.4 million position. Other investors bullish on the company included Adage Capital Management, 683 Capital Partners, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to MeiraGTx Holdings plc (NASDAQ:MGTX), around 2.99% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, earmarking 2.76 percent of its 13F equity portfolio to MGTX.
As one would reasonably expect, some big names have been driving this bullishness. Prosight Capital, managed by Lawrence Hawkins, assembled the most outsized position in MeiraGTx Holdings plc (NASDAQ:MGTX). Prosight Capital had $5.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’s AQR Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s also examine hedge fund activity in other stocks similar to MeiraGTx Holdings plc (NASDAQ:MGTX). These stocks are National Energy Services Reunited Corp. (NASDAQ:NESR), CryoPort, Inc. (NASDAQ:CYRX), Hanmi Financial Corp (NASDAQ:HAFC), and Ultra Clean Holdings Inc (NASDAQ:UCTT). This group of stocks’ market caps are closest to MGTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NESR | 9 | 24826 | 2 |
| CYRX | 10 | 28222 | -1 |
| HAFC | 9 | 31387 | 1 |
| UCTT | 13 | 65196 | 2 |
| Average | 10.25 | 37408 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $191 million in MGTX’s case. Ultra Clean Holdings Inc (NASDAQ:UCTT) is the most popular stock in this table. On the other hand National Energy Services Reunited Corp. (NASDAQ:NESR) is the least popular one with only 9 bullish hedge fund positions. MeiraGTx Holdings plc (NASDAQ:MGTX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MGTX as the stock returned 20.8% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
