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 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about argenx SE (NASDAQ:ARGX)?
Is ARGX a good stock to buy now? Money managers were in a pessimistic mood. The number of long hedge fund positions were cut by 7 lately. argenx SE (NASDAQ:ARGX) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. Our calculations also showed that ARGX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Lei Zhang of Hillhouse Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to take a look at the fresh hedge fund action surrounding argenx SE (NASDAQ:ARGX).
Do Hedge Funds Think ARGX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -24% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ARGX over the last 21 quarters. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Baker Bros. Advisors was the largest shareholder of argenx SE (NASDAQ:ARGX), with a stake worth $267.7 million reported as of the end of September. Trailing Baker Bros. Advisors was Redmile Group, which amassed a stake valued at $259.5 million. Avoro Capital Advisors (venBio Select Advisor), Hillhouse Capital Management, and Rock Springs Capital Management 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 Redmile Group allocated the biggest weight to argenx SE (NASDAQ:ARGX), around 4.76% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, dishing out 3.37 percent of its 13F equity portfolio to ARGX.
Judging by the fact that argenx SE (NASDAQ:ARGX) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers that slashed their entire stakes in the third quarter. At the top of the heap, Israel Englander’s Millennium Management dumped the biggest stake of the 750 funds tracked by Insider Monkey, totaling about $11.9 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dropped its stock, about $9.6 million worth. These moves are interesting, as total hedge fund interest dropped by 7 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as argenx SE (NASDAQ:ARGX) but similarly valued. These stocks are Knight-Swift Transportation Holdings Inc. (NYSE:KNX), The Mosaic Company (NYSE:MOS), Cabot Oil & Gas Corporation (NYSE:COG), Tandem Diabetes Care Inc (NASDAQ:TNDM), Morningstar, Inc. (NASDAQ:MORN), UGI Corp (NYSE:UGI), and Vedanta Ltd (NYSE:VEDL). This group of stocks’ market caps are similar to ARGX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KNX | 52 | 618019 | 13 |
| MOS | 31 | 714302 | -1 |
| COG | 25 | 203223 | -6 |
| TNDM | 30 | 379857 | -2 |
| MORN | 21 | 376758 | 1 |
| UGI | 23 | 181941 | -3 |
| VEDL | 9 | 33062 | 0 |
| Average | 27.3 | 358166 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $358 million. That figure was $1144 million in ARGX’s case. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 9 bullish hedge fund positions. argenx SE (NASDAQ:ARGX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ARGX is 32.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on ARGX as the stock returned 15.5% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
