Should I Buy Ionis Pharmaceuticals, Inc. (IONS)?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter of 2021. One of these stocks was Ionis Pharmaceuticals, Inc. (NASDAQ:IONS).

Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds’ portfolios at the end of September. Our calculations also showed that IONS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Cloudera, Inc. (NYSE:CLDR), Fastly, Inc. (NYSE:FSLY), and Travel + Leisure Co. (NYSE:TNL) to gather more data points.

Michael Gelband of ExodusPoint Capital

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 take a gander at the fresh hedge fund action surrounding Ionis Pharmaceuticals, Inc. (NASDAQ:IONS).

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

At third quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IONS over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, ARK Investment Management was the largest shareholder of Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), with a stake worth $285.5 million reported as of the end of September. Trailing ARK Investment Management was Camber Capital Management, which amassed a stake valued at $83.9 million. Citadel Investment Group, Polar Capital, and Eversept Partners 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 Camber Capital Management allocated the biggest weight to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), around 2.58% of its 13F portfolio. Parkman Healthcare Partners is also relatively very bullish on the stock, designating 1.16 percent of its 13F equity portfolio to IONS.

Because Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) has witnessed falling interest from the smart money, it’s easy to see that there is a sect of money managers who sold off their positions entirely by the end of the third quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $7.1 million in stock. Peter Muller’s fund, PDT Partners, also sold off its stock, about $5.7 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). These stocks are Cloudera, Inc. (NYSE:CLDR), Fastly, Inc. (NYSE:FSLY), Travel + Leisure Co. (NYSE:TNL), Atotech Limited (NYSE:ATC), United Bankshares, Inc. (NASDAQ:UBSI), Adagio Therapeutics Inc. (NASDAQ:ADGI), and Balchem Corporation (NASDAQ:BCPC). This group of stocks’ market caps resemble IONS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $559 million. That figure was $527 million in IONS’s case. Travel + Leisure Co. (NYSE:TNL) is the most popular stock in this table. On the other hand Adagio Therapeutics Inc. (NASDAQ:ADGI) is the least popular one with only 12 bullish hedge fund positions. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IONS is 59.3. 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 positive signal but 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 beat the market again by 5.1 percentage points. Unfortunately IONS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IONS were disappointed as the stock returned -9.7% 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 many of these stocks already outperformed the market since 2019.

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

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