In this article we will take a look at whether hedge funds think Immunovant, Inc. (NASDAQ:IMVT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Immunovant, Inc. (NASDAQ:IMVT) was in 26 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 36. IMVT investors should pay attention to a decrease in hedge fund interest of late. There were 36 hedge funds in our database with IMVT positions at the end of the fourth quarter. Our calculations also showed that IMVT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Nathaniel August of Mangrove Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to take a look at the recent hedge fund action encompassing Immunovant, Inc. (NASDAQ:IMVT).
Do Hedge Funds Think IMVT Is A Good Stock To Buy Now?
At the end of March, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IMVT over the last 23 quarters. So, let’s review 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, Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, holds the biggest position in Immunovant, Inc. (NASDAQ:IMVT). Biotechnology Value Fund / BVF Inc has a $18.4 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Michael Rockefeller and KarláKroeker of Woodline Partners, with a $14.4 million position; 0.3% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group and David MacKnight’s One Fin Capital Management. In terms of the portfolio weights assigned to each position One Fin Capital Management allocated the biggest weight to Immunovant, Inc. (NASDAQ:IMVT), around 3.41% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, designating 1.1 percent of its 13F equity portfolio to IMVT.
Since Immunovant, Inc. (NASDAQ:IMVT) has witnessed declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of money managers that decided to sell off their entire stakes heading into Q2. It’s worth mentioning that Phill Gross and Robert Atchinson’s Adage Capital Management said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $64.7 million in stock, and Joseph Edelman’s Perceptive Advisors was right behind this move, as the fund said goodbye to about $64.7 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 10 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Immunovant, Inc. (NASDAQ:IMVT) but similarly valued. We will take a look at Enerpac Tool Group Corp. (NYSE:EPAC), Heartland Express, Inc. (NASDAQ:HTLD), Delek Logistics Partners LP (NYSE:DKL), FARO Technologies, Inc. (NASDAQ:FARO), Companhia Brasileira de Distribuição (NYSE:CBD), Waddell & Reed Financial, Inc. (NYSE:WDR), and Applied Molecular Transport Inc. (NASDAQ:AMTI). This group of stocks’ market valuations are closest to IMVT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EPAC | 7 | 114807 | -4 |
| HTLD | 12 | 50604 | -1 |
| DKL | 1 | 2627 | 0 |
| FARO | 14 | 195684 | 1 |
| CBD | 10 | 11140 | 4 |
| WDR | 17 | 123559 | -8 |
| AMTI | 3 | 11220 | -1 |
| Average | 9.1 | 72806 | -1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $131 million in IMVT’s case. Waddell & Reed Financial, Inc. (NYSE:WDR) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Immunovant, Inc. (NASDAQ:IMVT) is more popular among hedge funds. Our overall hedge fund sentiment score for IMVT is 66.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately IMVT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IMVT were disappointed as the stock returned -32.2% since the end of the first quarter (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
