Here is What Hedge Funds Think About Ascendis Pharma A/S (ASND)

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Ascendis Pharma A/S (NASDAQ:ASND) to find out whether there were any major changes in hedge funds’ views.

Is Ascendis Pharma A/S (NASDAQ:ASND) the right investment to pursue these days? The smart money was taking an optimistic view. The number of bullish hedge fund positions moved up by 1 lately. Ascendis Pharma A/S (NASDAQ:ASND) was in 29 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 38. Our calculations also showed that ASND isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the 21st century investor’s toolkit there are many indicators shareholders can use to evaluate publicly traded companies. Two of the less known indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can outpace the market by a significant margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Peter Kolchinsky of RA Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the new hedge fund action surrounding Ascendis Pharma A/S (NASDAQ:ASND).

Do Hedge Funds Think ASND Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ASND over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, RA Capital Management held the most valuable stake in Ascendis Pharma A/S (NASDAQ:ASND), which was worth $895.4 million at the end of the second quarter. On the second spot was Baker Bros. Advisors which amassed $465.7 million worth of shares. Avoro Capital Advisors (venBio Select Advisor), Vivo Capital, and Lone Pine Capital 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 RA Capital Management allocated the biggest weight to Ascendis Pharma A/S (NASDAQ:ASND), around 14.37% of its 13F portfolio. Vivo Capital is also relatively very bullish on the stock, setting aside 8.69 percent of its 13F equity portfolio to ASND.

Consequently, specific money managers were leading the bulls’ herd. Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, assembled the most valuable position in Ascendis Pharma A/S (NASDAQ:ASND). Avoro Capital Advisors (venBio Select Advisor) had $249.9 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $2.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Donald Sussman’s Paloma Partners and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ascendis Pharma A/S (NASDAQ:ASND) but similarly valued. We will take a look at Brooks Automation, Inc. (NASDAQ:BRKS), Freshpet Inc (NASDAQ:FRPT), Harley-Davidson, Inc. (NYSE:HOG), Mattel, Inc. (NASDAQ:MAT), First Financial Bankshares Inc (NASDAQ:FFIN), Cabot Oil & Gas Corporation (NYSE:COG), and Envista Holdings Corporation (NYSE:NVST). This group of stocks’ market values resemble ASND’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $620 million. That figure was $2290 million in ASND’s case. Envista Holdings Corporation (NYSE:NVST) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 8 bullish hedge fund positions. Ascendis Pharma A/S (NASDAQ:ASND) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ASND is 63.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on ASND as the stock returned 21.6% since the end of Q2 (through 10/15) 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.