Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by 4 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).
NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) was in 10 hedge funds’ portfolios at the end of the second quarter of 2019. NGM shareholders have witnessed an increase in enthusiasm from smart money lately. There were 0 hedge funds in our database with NGM positions at the end of the previous quarter. Our calculations also showed that NGM isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are tons of tools stock traders put to use to size up stocks. A couple of the less known tools are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a significant amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to check out the recent hedge fund action surrounding NGM Biopharmaceuticals, Inc. (NASDAQ:NGM).
How have hedgies been trading NGM Biopharmaceuticals, Inc. (NASDAQ:NGM)?
At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10 from the first quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in NGM a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Rock Springs Capital Management held the most valuable stake in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), which was worth $5.1 million at the end of the second quarter. On the second spot was Jasper Ridge Partners which amassed $5.1 million worth of shares. Moreover, Healthcor Management LP, EcoR1 Capital, and Baker Bros. Advisors were also bullish on NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds have been driving this bullishness. Rock Springs Capital Management, managed by Kris Jenner, Gordon Bussard, Graham McPhail, established the largest position in NGM Biopharmaceuticals, Inc. (NASDAQ:NGM). Rock Springs Capital Management had $5.1 million invested in the company at the end of the quarter. Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners also made a $5.1 million investment in the stock during the quarter. The other funds with brand new NGM positions are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Oleg Nodelman’s EcoR1 Capital, and Julian Baker and Felix Baker’s Baker Bros. Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) but similarly valued. We will take a look at Twist Bioscience Corporation (NASDAQ:TWST), Mesa Laboratories, Inc. (NASDAQ:MLAB), Ballard Power Systems Inc. (NASDAQ:BLDP), and Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA). All of these stocks’ market caps match NGM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWST | 9 | 70227 | 6 |
| MLAB | 8 | 54809 | -2 |
| BLDP | 4 | 784 | 1 |
| LTRPA | 21 | 255525 | -2 |
| Average | 10.5 | 95336 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $27 million in NGM’s case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand Ballard Power Systems Inc. (NASDAQ:BLDP) is the least popular one with only 4 bullish hedge fund positions. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NGM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); NGM investors were disappointed as the stock returned -5.4% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
