We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 835 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 MorphoSys AG (NASDAQ:MOR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
MorphoSys AG (NASDAQ:MOR) has seen an increase in hedge fund sentiment of late. Our calculations also showed that MOR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the new hedge fund action regarding MorphoSys AG (NASDAQ:MOR).
What does smart money think about MorphoSys AG (NASDAQ:MOR)?
At Q4’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in MOR a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Partner Fund Management held the most valuable stake in MorphoSys AG (NASDAQ:MOR), which was worth $15.5 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $0.8 million worth of shares. Citadel Investment Group, Consonance Capital Management, and Millennium 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 Partner Fund Management allocated the biggest weight to MorphoSys AG (NASDAQ:MOR), around 0.74% of its 13F portfolio. Aquilo Capital Management is also relatively very bullish on the stock, dishing out 0.08 percent of its 13F equity portfolio to MOR.
With a general bullishness amongst the heavyweights, key money managers have jumped into MorphoSys AG (NASDAQ:MOR) headfirst. Partner Fund Management, managed by Christopher James, initiated the largest position in MorphoSys AG (NASDAQ:MOR). Partner Fund Management had $15.5 million invested in the company at the end of the quarter. Mitchell Blutt’s Consonance Capital Management also initiated a $0.8 million position during the quarter. The only other fund with a brand new MOR position is Marc Schneidman’s Aquilo Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as MorphoSys AG (NASDAQ:MOR) but similarly valued. These stocks are Janus Henderson Group plc (NYSE:JHG), ViaSat, Inc. (NASDAQ:VSAT), Landstar System, Inc. (NASDAQ:LSTR), and Immunomedics, Inc. (NASDAQ:IMMU). All of these stocks’ market caps are similar to MOR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JHG | 18 | 198961 | 2 |
| VSAT | 26 | 1810045 | -4 |
| LSTR | 24 | 196876 | 2 |
| IMMU | 28 | 829753 | 6 |
| Average | 24 | 758909 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $759 million. That figure was $19 million in MOR’s case. Immunomedics, Inc. (NASDAQ:IMMU) is the most popular stock in this table. On the other hand Janus Henderson Group plc (NYSE:JHG) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks MorphoSys AG (NASDAQ:MOR) is even less popular than JHG. Hedge funds dodged a bullet by taking a bearish stance towards MOR. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but managed to beat the market by 4.2 percentage points. Unfortunately MOR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MOR investors were disappointed as the stock returned -28.8% during the same time period 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 most of these stocks already outperformed the market so far in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
