Is NovoCure Limited (NASDAQ:NVCR) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is NovoCure Limited (NASDAQ:NVCR) a buy here? The best stock pickers are becoming hopeful. The number of bullish hedge fund bets advanced by 8 recently. Our calculations also showed that nvcr isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the recent hedge fund action surrounding NovoCure Limited (NASDAQ:NVCR).
Hedge fund activity in NovoCure Limited (NASDAQ:NVCR)
Heading into the second quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from the fourth quarter of 2018. On the other hand, there were a total of 18 hedge funds with a bullish position in NVCR a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jim Simons’s Renaissance Technologies has the most valuable position in NovoCure Limited (NASDAQ:NVCR), worth close to $89.4 million, corresponding to 0.1% of its total 13F portfolio. The second largest stake is held by Darsana Capital Partners, managed by Anand Desai, which holds a $84.3 million position; 3.2% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish include Thomas Steyer’s Farallon Capital, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors.
With a general bullishness amongst the heavyweights, key money managers have jumped into NovoCure Limited (NASDAQ:NVCR) headfirst. Millennium Management, managed by Israel Englander, created the largest position in NovoCure Limited (NASDAQ:NVCR). Millennium Management had $5.8 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $4.2 million position during the quarter. The other funds with new positions in the stock are Crispin Odey’s Odey Asset Management Group, Paul Tudor Jones’s Tudor Investment Corp, and David Costen Haley’s HBK Investments.
Let’s also examine hedge fund activity in other stocks similar to NovoCure Limited (NASDAQ:NVCR). These stocks are Carter’s, Inc. (NYSE:CRI), Assured Guaranty Ltd. (NYSE:AGO), Medidata Solutions Inc (NASDAQ:MDSO), and Science Applications International Corp (NYSE:SAIC). This group of stocks’ market valuations match NVCR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRI | 19 | 278631 | -3 |
| AGO | 34 | 559263 | 1 |
| MDSO | 16 | 214798 | 5 |
| SAIC | 28 | 356290 | 4 |
| Average | 24.25 | 352246 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $352 million. That figure was $331 million in NVCR’s case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table. On the other hand Medidata Solutions Inc (NASDAQ:MDSO) is the least popular one with only 16 bullish hedge fund positions. NovoCure Limited (NASDAQ:NVCR) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on NVCR as the stock returned 11.6% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
