We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like PTC Therapeutics, Inc. (NASDAQ:PTCT). The only ETF with a significant weight, 4.5%, in PTCT is Global X Genomics & Biotechnology ETF (NASDAQ:GNOM). Because of companies like PTCT, US is the most technologically advanced country in the world.
Is PTC Therapeutics, Inc. (NASDAQ:PTCT) a buy right now? Money managers are in an optimistic mood. The number of bullish hedge fund bets went up by 6 recently. Our calculations also showed that PTCT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the fresh hedge fund action surrounding PTC Therapeutics, Inc. (NASDAQ:PTCT).
How have hedgies been trading PTC Therapeutics, Inc. (NASDAQ:PTCT)?
Heading into the fourth quarter of 2019, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PTCT over the last 17 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Point72 Asset Management held the most valuable stake in PTC Therapeutics, Inc. (NASDAQ:PTCT), which was worth $80.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $73.4 million worth of shares. Great Point Partners, OrbiMed Advisors, and Partner Fund Management 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 TPG-AXON Management LP allocated the biggest weight to PTC Therapeutics, Inc. (NASDAQ:PTCT), around 17.97% of its portfolio. Great Point Partners is also relatively very bullish on the stock, dishing out 6.21 percent of its 13F equity portfolio to PTCT.
Now, some big names have been driving this bullishness. Partner Fund Management, managed by Christopher James, created the largest position in PTC Therapeutics, Inc. (NASDAQ:PTCT). Partner Fund Management had $55.9 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $13.5 million investment in the stock during the quarter. The other funds with brand new PTCT positions are Paul Marshall and Ian Wace’s Marshall Wace, Jonathan Barrett and Paul Segal’s Luminus Management, and Steven Boyd’s Armistice Capital.
Let’s check out hedge fund activity in other stocks similar to PTC Therapeutics, Inc. (NASDAQ:PTCT). We will take a look at National Storage Affiliates Trust (NYSE:NSA), NovaGold Resources Inc. (NYSEA:NG), Euronav NV (NYSE:EURN), and Cannae Holdings, Inc. (NYSE:CNNE). All of these stocks’ market caps are similar to PTCT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSA | 15 | 137737 | -3 |
| NG | 16 | 211750 | 6 |
| EURN | 18 | 138289 | 2 |
| CNNE | 19 | 241748 | 0 |
| Average | 17 | 182381 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $182 million. That figure was $558 million in PTCT’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand National Storage Affiliates Trust (NYSE:NSA) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks PTC Therapeutics, Inc. (NASDAQ:PTCT) is more popular among hedge funds. 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 PTCT as the stock returned 38.9% during the first two months of Q4 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.
Disclosure: None. This article was originally published at Insider Monkey.
