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. Insider Monkey finished processing more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD).
Is Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) ready to rally soon? The smart money is in an optimistic mood. The number of long hedge fund bets improved by 1 in recent months. Our calculations also showed that IRWD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Oleg Nodelman of EcoR1 Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to review the key hedge fund action surrounding Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD).
How have hedgies been trading Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the second quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in IRWD a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sarissa Capital Management held the most valuable stake in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), which was worth $86.7 million at the end of the third quarter. On the second spot was MFN Partners which amassed $55.3 million worth of shares. EcoR1 Capital, Citadel Investment Group, and Marshall Wace 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 Sarissa Capital Management allocated the biggest weight to Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), around 10.87% of its 13F portfolio. MFN Partners is also relatively very bullish on the stock, earmarking 8.26 percent of its 13F equity portfolio to IRWD.
Consequently, key money managers were breaking ground themselves. Renaissance Technologies initiated the largest position in Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD). Renaissance Technologies had $0.7 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $0.3 million position during the quarter. The other funds with brand new IRWD positions are Michael Gelband’s ExodusPoint Capital, Mike Vranos’s Ellington, and George Zweig, Shane Haas and Ravi Chander’s Signition LP.
Let’s go over hedge fund activity in other stocks similar to Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD). We will take a look at Ping Identity Holding Corp. (NYSE:PING), Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL), Osisko Gold Royalties Ltd (NYSE:OR), and Covetrus, Inc. (NASDAQ:CVET). This group of stocks’ market values resemble IRWD’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PING | 18 | 70018 | 18 |
| MDGL | 12 | 264363 | 0 |
| OR | 13 | 42365 | 1 |
| CVET | 21 | 140444 | 1 |
| Average | 16 | 129298 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $250 million in IRWD’s case. Covetrus, Inc. (NASDAQ:CVET) is the most popular stock in this table. On the other hand Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on IRWD as the stock returned 39.9% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
