Is PTGX Stock A Buy or Sell?

In this article you are going to find out whether hedge funds think Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is PTGX stock a buy? Protagonist Therapeutics, Inc. (NASDAQ:PTGX) shareholders have witnessed an increase in hedge fund sentiment lately. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PTGX isn’t among the 30 most popular stocks among hedge funds (click for Q4 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

James E. Flynn of Deerfield Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to review the fresh hedge fund action regarding Protagonist Therapeutics, Inc. (NASDAQ:PTGX).

Do Hedge Funds Think PTGX Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 77% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in PTGX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

The largest stake in Protagonist Therapeutics, Inc. (NASDAQ:PTGX) was held by Biotechnology Value Fund / BVF Inc, which reported holding $86.2 million worth of stock at the end of December. It was followed by Consonance Capital Management with a $55 million position. Other investors bullish on the company included Farallon Capital, Baker Bros. Advisors, and Deerfield Management. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Protagonist Therapeutics, Inc. (NASDAQ:PTGX), around 5.14% of its 13F portfolio. Commodore Capital is also relatively very bullish on the stock, dishing out 3.81 percent of its 13F equity portfolio to PTGX.

As one would reasonably expect, some big names were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the biggest position in Protagonist Therapeutics, Inc. (NASDAQ:PTGX). Point72 Asset Management had $11.1 million invested in the company at the end of the quarter. James A. Silverman’s Opaleye Management also made a $7 million investment in the stock during the quarter. The other funds with new positions in the stock are Egen Atkinson and Michael Kramarz’s Commodore Capital, Ken Griffin’s Citadel Investment Group, and Prashanth Jayaram’s Tri Locum Partners.

Let’s check out hedge fund activity in other stocks similar to Protagonist Therapeutics, Inc. (NASDAQ:PTGX). We will take a look at Ingles Markets, Incorporated (NASDAQ:IMKTA), Tenneco Inc (NYSE:TEN), OneSpaWorld Holdings Limited (NASDAQ:OSW), Veeco Instruments Inc. (NASDAQ:VECO), BJ’s Restaurants, Inc. (NASDAQ:BJRI), Premier Financial Corp. (NASDAQ:PFC), and Scholastic Corp (NASDAQ:SCHL). This group of stocks’ market values resemble PTGX’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $333 million in PTGX’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand BJ’s Restaurants, Inc. (NASDAQ:BJRI) is the least popular one with only 11 bullish hedge fund positions. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PTGX is 82.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on PTGX as the stock returned 29.5% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.