Is Ligand Pharmaceuticals Inc. (NASDAQ:LGND) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Ligand Pharmaceuticals Inc. (NASDAQ:LGND) has seen an increase in support from the world’s most elite money managers of late. Our calculations also showed that LGND isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the key hedge fund action encompassing Ligand Pharmaceuticals Inc. (NASDAQ:LGND).
How have hedgies been trading Ligand Pharmaceuticals Inc. (NASDAQ:LGND)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LGND over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ligand Pharmaceuticals Inc. (NASDAQ:LGND) was held by Renaissance Technologies, which reported holding $207 million worth of stock at the end of September. It was followed by Dorset Management with a $94.4 million position. Other investors bullish on the company included Cardinal Capital, Two Sigma Advisors, and Millennium Management.
As one would reasonably expect, key hedge funds have jumped into Ligand Pharmaceuticals Inc. (NASDAQ:LGND) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Ligand Pharmaceuticals Inc. (NASDAQ:LGND). Millennium Management had $26.4 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $8.5 million position during the quarter. The other funds with new positions in the stock are Richard Driehaus’s Driehaus Capital, Matthew Hulsizer’s PEAK6 Capital Management, and John Horseman’s Horseman Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Ligand Pharmaceuticals Inc. (NASDAQ:LGND). We will take a look at Gentex Corporation (NASDAQ:GNTX), Murphy Oil Corporation (NYSE:MUR), First American Financial Corp (NYSE:FAF), and Lazard Ltd (NYSE:LAZ). All of these stocks’ market caps resemble LGND’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GNTX | 27 | 312500 | 1 |
| MUR | 23 | 363595 | 0 |
| FAF | 33 | 620242 | 7 |
| LAZ | 17 | 468779 | 0 |
| Average | 25 | 441279 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $441 million. That figure was $544 million in LGND’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand Lazard Ltd (NYSE:LAZ) is the least popular one with only 17 bullish hedge fund positions. Ligand Pharmaceuticals Inc. (NASDAQ:LGND) 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 FAF might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
