Here is What Hedge Funds Think About Agios Pharmaceuticals Inc (AGIO)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. 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 Agios Pharmaceuticals Inc (NASDAQ:AGIO).

Is Agios Pharmaceuticals Inc (NASDAQ:AGIO) a buy, sell, or hold? Hedge funds are in a bullish mood. The number of bullish hedge fund positions inched up by 8 lately. AGIO was in 19 hedge funds’ portfolios at the end of the third quarter of 2016. There were 11 hedge funds in our database with AGIO holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as FIRSTSERVICE CORPORATION (TSE:FSV), LogMeIn Inc (NASDAQ:LOGM), and Kemper Corporation (NYSE:KMPR) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Keeping this in mind, we’re going to analyze the fresh action regarding Agios Pharmaceuticals Inc (NASDAQ:AGIO).

How have hedgies been trading Agios Pharmaceuticals Inc (NASDAQ:AGIO)?

Heading into the fourth quarter of 2016, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a surge of 73% from the previous quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Balyasny Asset Management, run by Dmitry Balyasny, holds the largest position in Agios Pharmaceuticals Inc (NASDAQ:AGIO). According to regulatory filings, the fund has a $48.6 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Jeremy Green of Redmile Group, with a $39 million position; 3.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish contain Hal Mintz’s Sabby Capital, Principal Global Investors’s Columbus Circle Investors and Ken Griffin’s Citadel Investment Group.

Now, key money managers have jumped into Agios Pharmaceuticals Inc (NASDAQ:AGIO) headfirst. Jeremy Green’s Redmile Group assembled the biggest position in Agios Pharmaceuticals Inc (NASDAQ:AGIO), followed by Hal Mintz’s Sabby Capital, which initiated a $21.7 million position during the quarter. The other funds with brand new AGIO positions are Principal Global Investors’s Columbus Circle Investors, Ken Griffin’s Citadel Investment Group, and Oleg Nodelman’s EcoR1 Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Agios Pharmaceuticals Inc (NASDAQ:AGIO) but similarly valued. We will take a look at FIRSTSERVICE CORPORATION (TSE:FSV), LogMeIn Inc (NASDAQ:LOGM), Kemper Corporation (NYSE:KMPR), and Radius Health Inc (NASDAQ:RDUS). This group of stocks’ market values match AGIO’s market value.

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 $243 million. That figure was $219 million in AGIO’s case. LogMeIn Inc (NASDAQ:LOGM) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 5 bullish hedge fund positions. Agios Pharmaceuticals Inc (NASDAQ:AGIO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LOGM might be a better candidate to consider a long position.

Disclosure: none.