The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards FibroGen Inc (NASDAQ:FGEN).
Is FibroGen Inc (NASDAQ:FGEN) a safe stock to buy now? It looks like money managers are taking a pessimistic view. The number of bullish hedge fund positions among the funds in the Insider Monkey database retreated by two during the third quarter. However, 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 Advantage Oil & Gas Ltd (USA) (NYSE:AAV), Infinera Corp. (NASDAQ:INFN), and Natus Medical Inc (NASDAQ:BABY) to gather more data points.
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Keeping this in mind, let’s review the fresh action surrounding FibroGen Inc (NASDAQ:FGEN).
What does the smart money think about FibroGen Inc (NASDAQ:FGEN)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in FibroGen, down by 12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FGEN over the last five quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the most valuable position in FibroGen Inc (NASDAQ:FGEN), worth close to $31.3 million, amounting to 0.1% of its total 13F portfolio. The second largest stake is held by EcoR1 Capital, led by Oleg Nodelman, which holds a $14.2 million position; 4.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism comprise Lei Zhang’s Hillhouse Capital Management, Zach Schreiber’s Point State Capital, and Israel Englander’s Millennium Management. 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 FibroGen Inc (NASDAQ:FGEN) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds that decided to sell off their full holdings by the end of the third quarter. Intriguingly, David Costen Haley’s HBK Investments dumped the biggest position of all the hedgies watched by Insider Monkey, totaling close to $1.9 million in stock. John Thiessen’s fund, Vertex One Asset Management, also cut its stock, about $1.3 million worth.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as FibroGen Inc (NASDAQ:FGEN) but similarly valued. We will take a look at Advantage Oil & Gas Ltd (USA) (NYSE:AAV), Infinera Corp. (NASDAQ:INFN), Natus Medical Inc (NASDAQ:BABY), and CVR Refining LP (NYSE:CVRR). This group of stocks’ market values are similar to FGEN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAV | 9 | 12530 | 0 |
| INFN | 17 | 67309 | 2 |
| BABY | 15 | 93832 | -5 |
| CVRR | 6 | 52469 | -1 |
As you can see these stocks had an average of 12 funds with long positions and the average amount invested in these stocks was $57 million. That figure was $103 million in FGEN’s case. Infinera Corp. (NASDAQ:INFN) is the most popular stock in this table. On the other hand CVR Refining LP (NYSE:CVRR) is the least popular one with only six bullish hedge fund positions. FibroGen Inc (NASDAQ:FGEN) 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 Infinera Corp. (NASDAQ:INFN) might be a better candidate to consider taking a long position in.
Disclosure: none
