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 (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA).
Is Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) the right pick for your portfolio? Money managers are buying. The number of long hedge fund bets went up by 15 lately. Our calculations also showed that MNTA 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). MNTA was in 33 hedge funds’ portfolios at the end of December. There were 18 hedge funds in our database with MNTA positions at the end of the previous quarter.
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 more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Kolchinsky of RA Capital Management
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. 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. With all of this in mind let’s take a glance at the key hedge fund action surrounding Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA).
What have hedge funds been doing with Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA)?
Heading into the first quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 83% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in MNTA a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Camber Capital Management held the most valuable stake in Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), which was worth $64.1 million at the end of the third quarter. On the second spot was Redmile Group which amassed $63.9 million worth of shares. Perceptive Advisors, Great Point Partners, and Farallon Capital 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 Great Point Partners allocated the biggest weight to Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), around 4.79% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, designating 3.26 percent of its 13F equity portfolio to MNTA.
Consequently, key money managers were leading the bulls’ herd. Redmile Group, managed by Jeremy Green, established the most outsized position in Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA). Redmile Group had $63.9 million invested in the company at the end of the quarter. Farallon Capital also initiated a $54.3 million position during the quarter. The other funds with brand new MNTA positions are Peter Kolchinsky’s RA Capital Management, Brandon Haley’s Holocene Advisors, and Michael Rockefeller and Karl Kroeker’s Woodline Partners.
Let’s also examine hedge fund activity in other stocks similar to Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA). These stocks are ProAssurance Corporation (NYSE:PRA), Four Corners Property Trust, Inc. (NYSE:FCPT), Coeur d’Alene Mines Corporation (NYSE:CDE), and Harmony Gold Mining Co. (NYSE:HMY). This group of stocks’ market values resemble MNTA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRA | 18 | 189428 | 3 |
| FCPT | 15 | 91164 | -3 |
| CDE | 15 | 73570 | 0 |
| HMY | 12 | 79446 | 2 |
| Average | 15 | 108402 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $553 million in MNTA’s case. ProAssurance Corporation (NYSE:PRA) is the most popular stock in this table. On the other hand Harmony Gold Mining Co. (NYSE:HMY) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) is more popular among hedge funds. 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 13.0% in 2020 through April 6th but still managed to beat the market by 4.2 percentage points. Hedge funds were also right about betting on MNTA as the stock returned 41.9% so far in 2020 (through April 6th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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.
