“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) has seen a decrease in hedge fund sentiment recently. Our calculations also showed that RIGL isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the latest hedge fund action encompassing Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL).
What have hedge funds been doing with Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL)?
At the end of the first quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RIGL over the last 15 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) was held by Millennium Management, which reported holding $18 million worth of stock at the end of March. It was followed by Tamarack Capital Management with a $13.6 million position. Other investors bullish on the company included Rock Springs Capital Management, Citadel Investment Group, and Palo Alto Investors.
Due to the fact that Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there were a few funds that slashed their entire stakes heading into Q3. Interestingly, Efrem Kamen’s Pura Vida Investments dropped the largest stake of the 700 funds followed by Insider Monkey, worth about $0.8 million in stock. Cliff Asness’s fund, AQR Capital Management, also dropped its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds heading into Q3.
Let’s check out hedge fund activity in other stocks similar to Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL). These stocks are Anika Therapeutics, Inc. (NASDAQ:ANIK), GTY Technology Holdings, Inc. (NASDAQ:GTYH), Cowen Inc. (NASDAQ:COWN), and Fluent, Inc. (NASDAQ:FLNT). All of these stocks’ market caps resemble RIGL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ANIK | 15 | 47624 | 1 |
| GTYH | 9 | 13799 | -2 |
| COWN | 21 | 96363 | 4 |
| FLNT | 9 | 6703 | 4 |
| Average | 13.5 | 41122 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $80 million in RIGL’s case. Cowen Inc. (NASDAQ:COWN) is the most popular stock in this table. On the other hand GTY Technology Holdings, Inc. (NASDAQ:GTYH) is the least popular one with only 9 bullish hedge fund positions. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately RIGL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on RIGL were disappointed as the stock returned -10.9% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
