At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not NovoCure Limited (NASDAQ:NVCR) makes for a good investment right now.
NovoCure Limited (NASDAQ:NVCR) investors should pay attention to a decrease in hedge fund sentiment of late. NovoCure Limited (NASDAQ:NVCR) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that NVCR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Kris Jenner of Rock Springs Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to take a glance at the new hedge fund action regarding NovoCure Limited (NASDAQ:NVCR).
Do Hedge Funds Think NVCR Is A Good Stock To Buy Now?
At third quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the second quarter of 2021. On the other hand, there were a total of 22 hedge funds with a bullish position in NVCR a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in NovoCure Limited (NASDAQ:NVCR) was held by Darsana Capital Partners, which reported holding $81.3 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $38 million position. Other investors bullish on the company included Renaissance Technologies, Rock Springs Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Darsana Capital Partners allocated the biggest weight to NovoCure Limited (NASDAQ:NVCR), around 2.68% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, setting aside 1.33 percent of its 13F equity portfolio to NVCR.
Due to the fact that NovoCure Limited (NASDAQ:NVCR) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds who were dropping their positions entirely heading into Q4. At the top of the heap, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management dropped the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $9.3 million in call options, and D. E. Shaw’s D E Shaw was right behind this move, as the fund dumped about $2.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as NovoCure Limited (NASDAQ:NVCR) but similarly valued. These stocks are Papa Murphy’s Holdings Inc (NASDAQ:FRSH), CF Industries Holdings, Inc. (NYSE:CF), F5 Networks, Inc. (NASDAQ:FFIV), Medical Properties Trust, Inc. (NYSE:MPW), Sasol Limited (NYSE:SSL), Steel Dynamics, Inc. (NASDAQ:STLD), and Marqeta Inc. (NASDAQ:MQ). This group of stocks’ market values resemble NVCR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRSH | 41 | 316230 | 41 |
| CF | 49 | 1272709 | 2 |
| FFIV | 27 | 686095 | -3 |
| MPW | 18 | 365527 | -1 |
| SSL | 4 | 76164 | -1 |
| STLD | 23 | 481466 | -3 |
| MQ | 20 | 1100795 | -15 |
| Average | 26 | 614141 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $614 million. That figure was $241 million in NVCR’s case. CF Industries Holdings, Inc. (NYSE:CF) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 4 bullish hedge fund positions. NovoCure Limited (NASDAQ:NVCR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NVCR is 49.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately NVCR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); NVCR investors were disappointed as the stock returned -24.4% since the end of September (through 12/9) 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 in 2021.
Follow Novocure Ltd (NASDAQ:NVCR)
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Disclosure: None. This article was originally published at Insider Monkey.
