How do we determine whether Repligen Corporation (NASDAQ:RGEN) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Repligen Corporation (NASDAQ:RGEN) was in 23 hedge funds’ portfolios at the end of September. RGEN investors should be aware of an increase in hedge fund sentiment in recent months. There were 22 hedge funds in our database with RGEN holdings at the end of the previous quarter. Our calculations also showed that RGEN 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.
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.
Brad Farber of Atika Capital
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 gander at the recent hedge fund action regarding Repligen Corporation (NASDAQ:RGEN).
How are hedge funds trading Repligen Corporation (NASDAQ:RGEN)?
Heading into the fourth quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RGEN over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Repligen Corporation (NASDAQ:RGEN) was held by 12 West Capital Management, which reported holding $76.2 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $41.5 million position. Other investors bullish on the company included Renaissance Technologies, Sandler Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position 12 West Capital Management allocated the biggest weight to Repligen Corporation (NASDAQ:RGEN), around 4.91% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, dishing out 2.03 percent of its 13F equity portfolio to RGEN.
Now, key hedge funds were leading the bulls’ herd. Atika Capital, managed by Brad Farber, created the most outsized position in Repligen Corporation (NASDAQ:RGEN). Atika Capital had $5.4 million invested in the company at the end of the quarter. Andrew Weiss’s Weiss Asset Management also initiated a $1.8 million position during the quarter. The other funds with new positions in the stock are David E. Shaw’s D E Shaw and George Zweig, Shane Haas and Ravi Chander’s Signition LP.
Let’s now review hedge fund activity in other stocks similar to Repligen Corporation (NASDAQ:RGEN). We will take a look at FirstCash, Inc. (NASDAQ:FCFS), Mattel, Inc. (NASDAQ:MAT), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), and Shake Shack Inc (NYSE:SHAK). This group of stocks’ market caps resemble RGEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FCFS | 16 | 179303 | 1 |
| MAT | 22 | 685143 | 6 |
| SBGI | 29 | 467906 | -7 |
| SHAK | 26 | 607030 | -1 |
| Average | 23.25 | 484846 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $485 million. That figure was $223 million in RGEN’s case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand FirstCash, Inc. (NASDAQ:FCFS) is the least popular one with only 16 bullish hedge fund positions. Repligen Corporation (NASDAQ:RGEN) is not the least popular stock in this group but hedge fund interest is still below 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. A small number of hedge funds were also right about betting on RGEN as the stock returned 15.7% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
