Here is What Hedge Funds Think About NovoCure Limited (NVCR)

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 at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article we look at what those investors think of NovoCure Limited (NASDAQ:NVCR).

NovoCure Limited (NASDAQ:NVCR) has experienced an increase in activity from the world’s largest hedge funds lately. NovoCure Limited (NASDAQ:NVCR) was in 25 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that NVCR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Kris Jenner of Rock Springs 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. With all of this in mind we’re going to analyze the key hedge fund action regarding NovoCure Limited (NASDAQ:NVCR).

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

At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the first quarter of 2020. On the other hand, there were a total of 27 hedge funds with a bullish position in NVCR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Darsana Capital Partners, managed by Anand Desai, holds the number one position in NovoCure Limited (NASDAQ:NVCR). Darsana Capital Partners has a $155.3 million position in the stock, comprising 4.4% of its 13F portfolio. Sitting at the No. 2 spot is John Overdeck and David Siegel of Two Sigma Advisors, with a $69.9 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions consist of Renaissance Technologies, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Darsana Capital Partners allocated the biggest weight to NovoCure Limited (NASDAQ:NVCR), around 4.42% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, dishing out 3.38 percent of its 13F equity portfolio to NVCR.

As one would reasonably expect, key hedge funds have been driving this bullishness. Bridgewater Associates, managed by Ray Dalio, assembled the most valuable position in NovoCure Limited (NASDAQ:NVCR). Bridgewater Associates had $21.4 million invested in the company at the end of the quarter. Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management also initiated a $9.3 million position during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Israel Englander’s Millennium Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to NovoCure Limited (NASDAQ:NVCR). These stocks are W.W. Grainger, Inc. (NYSE:GWW), CNH Industrial NV (NYSE:CNHI), Trip.com Group Limited (NASDAQ:TCOM), MongoDB, Inc. (NASDAQ:MDB), CGI Inc. (NYSE:GIB), The Clorox Company (NYSE:CLX), and Imperial Oil Limited (NYSE:IMO). All of these stocks’ market caps are closest to NVCR’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $843 million. That figure was $501 million in NVCR’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 14 bullish hedge fund positions. NovoCure Limited (NASDAQ:NVCR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NVCR is 54.1. 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 negative signal and 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately NVCR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NVCR investors were disappointed as the stock returned -45.6% since the end of June (through 10/22) 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 in 2021.

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