Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
SAGE Therapeutics Inc (NASDAQ:SAGE) was in 18 hedge funds’ portfolios at the end of September. SAGE investors should pay attention to a decrease in hedge fund interest lately. There were 22 hedge funds in our database with SAGE positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Horace Mann Educators Corporation (NYSE:HMN), Park National Corporation (NYSEMKT:PRK), and Crestwood Equity Partners LP (NYSE:CEQP) to gather more data points.
Follow Sage Therapeutics Inc. (NASDAQ:SAGE)
Follow Sage Therapeutics Inc. (NASDAQ:SAGE)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
science photo/Shutterstock.com
What does the smart money think about SAGE Therapeutics Inc (NASDAQ:SAGE)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 18% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in SAGE over the last 5 quarters. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the number one position in SAGE Therapeutics Inc (NASDAQ:SAGE), worth close to $58.7 million. Sitting at the No. 2 spot is Palo Alto Investors, led by William Leland Edwards, holding a $41.5 million position; 2.4% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism contain Millennium Management, one of the largest hedge funds in the world, Paul Marshall and Ian Wace’s Marshall Wace LLP and Mark Kingdon’s Kingdon Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Because SAGE Therapeutics Inc (NASDAQ:SAGE) has encountered a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that slashed their full holdings last quarter. It’s worth mentioning that Bihua Chen’s Cormorant Asset Management said goodbye to the biggest investment of all the investors tracked by Insider Monkey, valued at about $22 million in stock.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SAGE Therapeutics Inc (NASDAQ:SAGE) but similarly valued. We will take a look at Horace Mann Educators Corporation (NYSE:HMN), Park National Corporation (NYSEMKT:PRK), Crestwood Equity Partners LP (NYSE:CEQP), and Infoblox Inc (NYSE:BLOX). This group of stocks’ market values resemble SAGE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HMN | 11 | 28980 | -2 |
| PRK | 4 | 7663 | 4 |
| CEQP | 7 | 19624 | -2 |
| BLOX | 29 | 437605 | 4 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $278 million in SAGE’s case. Infoblox Inc (NYSE:BLOX) is the most popular stock in this table. On the other hand Park National Corporation (NYSEAMEX:PRK) is the least popular one with only 4 bullish hedge fund positions. SAGE Therapeutics Inc (NASDAQ:SAGE) 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. In this regard BLOX might be a better candidate to consider taking a long position in.
Suggested Articles:
Easiest Smartphones To Use For Seniors
Most Profitable Online Businesses To Start
Highest Paying Countries For Teachers
Disclosure: None
