Here is What Hedge Funds Think About Ironwood Pharmaceuticals, Inc. (IRWD)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) has experienced a decrease in hedge fund interest recently. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 32. There were 28 hedge funds in our database with IRWD holdings at the end of June. Our calculations also showed that IRWD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s take a gander at the latest hedge fund action regarding Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD).

Alex Denner of Sarissa Capital Management

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

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IRWD over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) was held by Sarissa Capital Management, which reported holding $214.1 million worth of stock at the end of September. It was followed by Camber Capital Management with a $71.8 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and D E Shaw. In terms of the portfolio weights assigned to each position Sarissa Capital Management allocated the biggest weight to Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), around 16.8% of its 13F portfolio. HealthInvest Partners AB is also relatively very bullish on the stock, designating 13.4 percent of its 13F equity portfolio to IRWD.

Judging by the fact that Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) has faced bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of fund managers that slashed their full holdings in the third quarter. At the top of the heap, Arthur B Cohen and Joseph Healey’s Healthcor Management LP dumped the largest stake of all the hedgies monitored by Insider Monkey, worth an estimated $6.7 million in call options. Joseph Samuels’s fund, Islet Management, also said goodbye to its call options, about $6.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the third quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) but similarly valued. These stocks are ADC Therapeutics SA (NYSE:ADCT), Boise Cascade Co (NYSE:BCC), Seer, Inc. (NASDAQ:SEER), GCM Grosvenor Inc. (NASDAQ:GCMG), SelectQuote, Inc. (NYSE:SLQT), Allegheny Technologies Incorporated (NYSE:ATI), and Retail Opportunity Investments Corp (NASDAQ:ROIC). This group of stocks’ market values match IRWD’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $184 million. That figure was $443 million in IRWD’s case. Allegheny Technologies Incorporated (NYSE:ATI) is the most popular stock in this table. On the other hand ADC Therapeutics SA (NYSE:ADCT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is more popular among hedge funds. Our overall hedge fund sentiment score for IRWD is 79.3. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately IRWD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IRWD were disappointed as the stock returned -13.7% since the end of the third quarter (through 12/9) 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 most of these stocks already outperformed the market since 2019.

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