A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on Zafgen Inc (NASDAQ:ZFGN).
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Is Zafgen Inc a buy right now? The best stock pickers are getting more optimistic. The number of long hedge fund bets rose by 2 lately. At the end of this article we will also compare ZFGN to other stocks including PharMerica Corporation (NYSE:PMC), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), and HudBay Minerals Inc Ord Shs (NYSE:HBM) to determine whether the increase in hedge fund activity is meaningful.
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In the 21st century investor’s toolkit there are tons of tools stock traders use toassess their stock investments. We believe a duo of the most useful tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the market by a superb margin (see the details here).
With all of this in mind, let’s view the recent action regarding Zafgen Inc (NASDAQ:ZFGN).
What have hedge funds been doing with Zafgen Inc (NASDAQ:ZFGN)?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.
James E. Flynn’s Deerfield Management had the biggest position in Zafgen Inc (NASDAQ:ZFGN), worth close to $17.7 million, comprising 0.7% of its total 13F portfolio. On Deerfield Management’s heels is VHCP Management, led by Anders Hove and Bong Koh, holding a $17.3 million position; the fund has 4.4% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Jason Karp’s Tourbillon Capital Partners, Julian Baker and Felix Baker’s Baker Bros. Advisors and Farallon Capital.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Tourbillon Capital Partners, managed by Jason Karp, initiated the largest position in Zafgen Inc (NASDAQ:ZFGN). Tourbillon Capital Partners had $14.7 million invested in the company at the end of the quarter. Ken Greenberg and David Kim’s Ghost Tree Capital also made a $2.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Cliff Asness’s AQR Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Stuart Weisbrod’s Iguana Healthcare Management.
Let’s now review hedge fund activity in other stocks similar to Zafgen Inc (NASDAQ:ZFGN). These stocks are PharMerica Corporation (NYSE:PMC), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), HudBay Minerals Inc Ord Shs (NYSE:HBM), and StoneMor Partners L.P. (NYSE:STON). This group of stocks’ market values resemble ZFGN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PMC | 23 | 86046 | 5 |
| AAWW | 22 | 93520 | -4 |
| HBM | 7 | 3215 | -4 |
| STON | 5 | 4517 | 0 |
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. PharMerica Corporation (NYSE:PMC) is the most popular stock in this table. On the other hand StoneMor Partners L.P. (NYSE:STON) is the least popular one with only 5 bullish hedge fund positions. Zafgen Inc (NASDAQ:ZFGN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on and already have large presence. In this regard STON might be a better candidate to consider a long position.
