We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Rubius Therapeutics, Inc. (NASDAQ:RUBY) based on that data.
Hedge fund interest in Rubius Therapeutics, Inc. (NASDAQ:RUBY) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Pzena Investment Management Inc (NYSE:PZN), KNOT Offshore Partners LP (NYSE:KNOP), and MacroGenics Inc (NASDAQ:MGNX) to gather more data points. Our calculations also showed that RUBY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s take a gander at the fresh hedge fund action encompassing Rubius Therapeutics, Inc. (NASDAQ:RUBY).
Hedge fund activity in Rubius Therapeutics, Inc. (NASDAQ:RUBY)
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RUBY over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Bihua Chen’s Cormorant Asset Management has the largest position in Rubius Therapeutics, Inc. (NASDAQ:RUBY), worth close to $3.9 million, corresponding to 0.2% of its total 13F portfolio. Coming in second is Alkeon Capital Management, led by Panayotis Takis Sparaggis, holding a $3.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Ken Griffin’s Citadel Investment Group, Oleg Nodelman’s EcoR1 Capital and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Rubius Therapeutics, Inc. (NASDAQ:RUBY), around 0.26% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, setting aside 0.23 percent of its 13F equity portfolio to RUBY.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Alkeon Capital Management).
Let’s also examine hedge fund activity in other stocks similar to Rubius Therapeutics, Inc. (NASDAQ:RUBY). These stocks are Pzena Investment Management Inc (NYSE:PZN), KNOT Offshore Partners LP (NYSE:KNOP), MacroGenics Inc (NASDAQ:MGNX), and National Presto Industries Inc. (NYSE:NPK). This group of stocks’ market valuations match RUBY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PZN | 7 | 20337 | 1 |
| KNOP | 3 | 21086 | -2 |
| MGNX | 14 | 92212 | -5 |
| NPK | 9 | 70014 | -3 |
| Average | 8.25 | 50912 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $12 million in RUBY’s case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand KNOT Offshore Partners LP (NYSE:KNOP) is the least popular one with only 3 bullish hedge fund positions. Rubius Therapeutics, Inc. (NASDAQ:RUBY) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately RUBY wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); RUBY investors were disappointed as the stock returned -1.9% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
