We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Repligen Corporation (NASDAQ:RGEN) and determine whether hedge funds skillfully traded this stock.
Repligen Corporation (NASDAQ:RGEN) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistics is 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. RGEN shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 21 hedge funds in our database with RGEN holdings at the end of March. Our calculations also showed that RGEN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 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.
Donald Sussman of Paloma Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a peek at the new hedge fund action surrounding Repligen Corporation (NASDAQ:RGEN).
Hedge fund activity in Repligen Corporation (NASDAQ:RGEN)
At Q2’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 62% from the first quarter of 2020. By comparison, 22 hedge funds held shares or bullish call options in RGEN a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Joel Ramin’s 12 West Capital Management has the most valuable position in Repligen Corporation (NASDAQ:RGEN), worth close to $136.3 million, comprising 7% of its total 13F portfolio. Coming in second is Select Equity Group, led by Robert Joseph Caruso, holding a $128.3 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Renaissance Technologies, Paul Marshall and Ian Wace’s Marshall Wace LLP and Steve Cohen’s Point72 Asset Management. In terms of the portfolio weights assigned to each position 12 West Capital Management allocated the biggest weight to Repligen Corporation (NASDAQ:RGEN), around 7.04% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, dishing out 2.19 percent of its 13F equity portfolio to RGEN.
As one would reasonably expect, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, established the largest position in Repligen Corporation (NASDAQ:RGEN). Millennium Management had $38.3 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $13 million position during the quarter. The following funds were also among the new RGEN investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Repligen Corporation (NASDAQ:RGEN) but similarly valued. We will take a look at GrubHub Inc (NYSE:GRUB), Federal Realty Investment Trust (NYSE:FRT), Plains All American Pipeline, L.P. (NYSE:PAA), Amedisys Inc (NASDAQ:AMED), Penumbra Inc (NYSE:PEN), Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), and United Microelectronics Corp (NYSE:UMC). All of these stocks’ market caps match RGEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRUB | 52 | 1080219 | 20 |
| FRT | 20 | 76045 | -4 |
| PAA | 9 | 65144 | 1 |
| AMED | 30 | 375114 | 10 |
| PEN | 20 | 263196 | 0 |
| OLLI | 24 | 179330 | 5 |
| UMC | 11 | 110335 | -4 |
| Average | 23.7 | 307055 | 4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $689 million in RGEN’s case. GrubHub Inc (NYSE:GRUB) is the most popular stock in this table. On the other hand Plains All American Pipeline, L.P. (NYSE:PAA) is the least popular one with only 9 bullish hedge fund positions. Repligen Corporation (NASDAQ:RGEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGEN is 69.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Hedge funds were also right about betting on RGEN as the stock returned 25.3% since Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
