Here is What Hedge Funds Think About Epizyme Inc (EPZM)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Epizyme Inc (NASDAQ:EPZM).

Epizyme Inc (NASDAQ:EPZM) investors should be aware of a decrease in hedge fund sentiment lately. Epizyme Inc (NASDAQ:EPZM) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic is 23. Our calculations also showed that EPZM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Today there are plenty of metrics investors use to assess stocks. Some of the less known metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top investment managers can outperform the market by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Jim Tananbaum of Foresite Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind let’s check out the key hedge fund action regarding Epizyme Inc (NASDAQ:EPZM).

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

At the end of March, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 22 hedge funds with a bullish position in EPZM 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.

Among these funds, Redmile Group held the most valuable stake in Epizyme Inc (NASDAQ:EPZM), which was worth $76.9 million at the end of the fourth quarter. On the second spot was Palo Alto Investors which amassed $59.7 million worth of shares. Rock Springs Capital Management, Foresite Capital, and Frazier Healthcare Partners 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 Foresite Capital allocated the biggest weight to Epizyme Inc (NASDAQ:EPZM), around 7.64% of its 13F portfolio. Burrage Capital Management is also relatively very bullish on the stock, earmarking 3.98 percent of its 13F equity portfolio to EPZM.

Due to the fact that Epizyme Inc (NASDAQ:EPZM) has faced falling interest from the smart money, logic holds that there were a few money managers who sold off their entire stakes by the end of the first quarter. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dropped the biggest stake of the 750 funds followed by Insider Monkey, valued at about $1.2 million in stock. Manoj Jain and Sohit Khurana’s fund, Maso Capital, also dropped its stock, about $0.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Epizyme Inc (NASDAQ:EPZM). We will take a look at Connect Biopharma Holdings Limited (NASDAQ:CNTB), Aegion Corp (NASDAQ:AEGN), Resolute Forest Products Inc (NYSE:RFP), World Acceptance Corp. (NASDAQ:WRLD), Quanex Building Products Corporation (NYSE:NX), NeoGames S.A. (NASDAQ:NGMS), and Lakeland Bancorp, Inc. (NASDAQ:LBAI). All of these stocks’ market caps are closest to EPZM’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $191 million in EPZM’s case. Aegion Corp (NASDAQ:AEGN) is the most popular stock in this table. On the other hand World Acceptance Corp. (NASDAQ:WRLD) is the least popular one with only 7 bullish hedge fund positions. Epizyme Inc (NASDAQ:EPZM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EPZM is 61.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately EPZM wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EPZM were disappointed as the stock returned -20.1% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.