Protagonist Therapeutics, Inc. (PTGX) Fell Out Of Favor With Hedge Funds

In this article we will check out the progression of hedge fund sentiment towards Protagonist Therapeutics, Inc. (NASDAQ:PTGX) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ 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.

Protagonist Therapeutics, Inc. (NASDAQ:PTGX) investors should pay attention to a decrease in enthusiasm from smart money recently. Protagonist Therapeutics, Inc. (NASDAQ:PTGX) was in 21 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 PTGX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. With all of this in mind we’re going to view the new hedge fund action encompassing Protagonist Therapeutics, Inc. (NASDAQ:PTGX).

Oleg Nodelman of EcoR1 Capital

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

At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PTGX over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

More specifically, Point72 Asset Management was the largest shareholder of Protagonist Therapeutics, Inc. (NASDAQ:PTGX), with a stake worth $77.7 million reported as of the end of September. Trailing Point72 Asset Management was Biotechnology Value Fund / BVF Inc, which amassed a stake valued at $69.1 million. Farallon Capital, EcoR1 Capital, and Deerfield 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Protagonist Therapeutics, Inc. (NASDAQ:PTGX), around 2.7% of its 13F portfolio. Commodore Capital is also relatively very bullish on the stock, designating 2.33 percent of its 13F equity portfolio to PTGX.

Because Protagonist Therapeutics, Inc. (NASDAQ:PTGX) has faced falling interest from the entirety of the hedge funds we track, logic holds that there were a few money managers who sold off their full holdings heading into Q4. Interestingly, Mitchell Blutt’s Consonance Capital Management said goodbye to the largest position of all the hedgies tracked by Insider Monkey, totaling close to $154.7 million in stock. Julian Baker and Felix Baker’s fund, Baker Bros. Advisors, also dropped its stock, about $20.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Protagonist Therapeutics, Inc. (NASDAQ:PTGX) but similarly valued. We will take a look at Tucows Inc. (NASDAQ:TCX), Triple-S Management Corp.(NYSE:GTS), CareMax Inc. (NASDAQ:CMAX), GreenTree Hospitality Group Ltd. (NYSE:GHG), Guild Holdings Company (NYSE:GHLD), Hailiang Education Group Inc. (NASDAQ:HLG), and Cutera, Inc. (NASDAQ:CUTR). This group of stocks’ market caps match PTGX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $289 million in PTGX’s case. Cutera, Inc. (NASDAQ:CUTR) is the most popular stock in this table. On the other hand Hailiang Education Group Inc. (NASDAQ:HLG) is the least popular one with only 1 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 65.8. 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 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on PTGX as the stock returned 93% since the end of Q3 (through 12/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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