We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Moderna, Inc. (NASDAQ:MRNA).
Is Moderna, Inc. (NASDAQ:MRNA) undervalued? The best stock pickers are becoming hopeful. The number of bullish hedge fund positions went up by 3 lately. Our calculations also showed that MRNA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To the average investor there are numerous methods shareholders use to grade their holdings. A couple of the less utilized methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can beat the market by a very impressive amount (see the details here).
Andreas Halvorsen of Viking Global
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to check out the latest hedge fund action encompassing Moderna, Inc. (NASDAQ:MRNA).
What have hedge funds been doing with Moderna, Inc. (NASDAQ:MRNA)?
Heading into the first quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in MRNA over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Moderna, Inc. (NASDAQ:MRNA) was held by Theleme Partners, which reported holding $126 million worth of stock at the end of September. It was followed by Viking Global with a $65 million position. Other investors bullish on the company included Platinum Asset Management, Segantii Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Theleme Partners allocated the biggest weight to Moderna, Inc. (NASDAQ:MRNA), around 7.1% of its 13F portfolio. Segantii Capital is also relatively very bullish on the stock, setting aside 1.55 percent of its 13F equity portfolio to MRNA.
Consequently, specific money managers were leading the bulls’ herd. Segantii Capital, managed by Simon Sadler, established the most valuable position in Moderna, Inc. (NASDAQ:MRNA). Segantii Capital had $21.4 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $7.3 million position during the quarter. The other funds with new positions in the stock are Jacob Doft’s Highline Capital Management, Noam Gottesman’s GLG Partners, and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks similar to Moderna, Inc. (NASDAQ:MRNA). We will take a look at Flowserve Corporation (NYSE:FLS), Alteryx, Inc. (NYSE:AYX), Mellanox Technologies, Ltd. (NASDAQ:MLNX), and ITT Corp (NYSE:ITT). This group of stocks’ market valuations resemble MRNA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FLS | 26 | 286522 | 4 |
| AYX | 44 | 961060 | 0 |
| MLNX | 39 | 1468992 | -3 |
| ITT | 28 | 756797 | 3 |
| Average | 34.25 | 868343 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $868 million. That figure was $256 million in MRNA’s case. Alteryx, Inc. (NYSE:AYX) is the most popular stock in this table. On the other hand Flowserve Corporation (NYSE:FLS) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Moderna, Inc. (NASDAQ:MRNA) is even less popular than FLS. Hedge funds clearly dropped the ball on MRNA as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. A small number of hedge funds were also right about betting on MRNA as the stock returned 35.4% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
