Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Applied Genetic Technologies Corp (NASDAQ:AGTC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Applied Genetic Technologies Corp (NASDAQ:AGTC) shareholders have witnessed an increase in hedge fund interest lately. AGTC was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with AGTC positions at the end of the previous quarter. Our calculations also showed that AGTC 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.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nathan Fischel of DAFNA Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the key hedge fund action surrounding Applied Genetic Technologies Corp (NASDAQ:AGTC).
How are hedge funds trading Applied Genetic Technologies Corp (NASDAQ:AGTC)?
Heading into the fourth quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 80% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AGTC over the last 17 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Applied Genetic Technologies Corp (NASDAQ:AGTC), which was worth $4.4 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $2.3 million worth of shares. DAFNA Capital Management, Marshall Wace, and D E Shaw 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 DAFNA Capital Management allocated the biggest weight to Applied Genetic Technologies Corp (NASDAQ:AGTC), around 0.56% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, setting aside 0.26 percent of its 13F equity portfolio to AGTC.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Applied Genetic Technologies Corp (NASDAQ:AGTC). Marshall Wace had $0.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter. The other funds with brand new AGTC positions are Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Applied Genetic Technologies Corp (NASDAQ:AGTC) but similarly valued. These stocks are Global Ship Lease, Inc. (NYSE:GSL), Genocea Biosciences Inc (NASDAQ:GNCA), Mersana Therapeutics, Inc. (NASDAQ:MRSN), and IF Bancorp Inc (NASDAQ:IROQ). This group of stocks’ market valuations match AGTC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GSL | 11 | 22635 | 8 |
| GNCA | 11 | 15243 | 0 |
| MRSN | 13 | 21203 | -1 |
| IROQ | 1 | 2125 | -1 |
| Average | 9 | 15302 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $9 million in AGTC’s case. Mersana Therapeutics, Inc. (NASDAQ:MRSN) is the most popular stock in this table. On the other hand IF Bancorp Inc (NASDAQ:IROQ) is the least popular one with only 1 bullish hedge fund positions. Applied Genetic Technologies Corp (NASDAQ:AGTC) is not the least popular stock in this group but hedge fund interest is still below average. 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 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. Unfortunately AGTC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AGTC investors were disappointed as the stock returned -34.1% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
