Is SAGE Therapeutics Inc (NASDAQ:SAGE) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
SAGE Therapeutics Inc (NASDAQ:SAGE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that SAGE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare SAGE to other stocks including J&J Snack Foods Corp. (NASDAQ:JJSF), LCI Industries (NYSE:LCII), and Walker & Dunlop Inc. (NYSE:WD) to get a better sense of its popularity.
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Paul Marshall of Marshall Wace
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Do Hedge Funds Think SAGE Is A Good Stock To Buy Now?
At Q2’s end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in SAGE a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in SAGE Therapeutics Inc (NASDAQ:SAGE) was held by D E Shaw, which reported holding $74.8 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $36.7 million position. Other investors bullish on the company included Palo Alto Investors, Integral Health Asset Management, and Ikarian Capital. In terms of the portfolio weights assigned to each position Integral Health Asset Management allocated the biggest weight to SAGE Therapeutics Inc (NASDAQ:SAGE), around 3.68% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, designating 2.98 percent of its 13F equity portfolio to SAGE.
Because SAGE Therapeutics Inc (NASDAQ:SAGE) has faced falling interest from hedge fund managers, it’s easy to see that there is a sect of funds that slashed their full holdings last quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $34.6 million in stock, and Farallon Capital was right behind this move, as the fund cut about $25.8 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as SAGE Therapeutics Inc (NASDAQ:SAGE) but similarly valued. We will take a look at J&J Snack Foods Corp. (NASDAQ:JJSF), LCI Industries (NYSE:LCII), Walker & Dunlop Inc. (NYSE:WD), Herc Holdings Inc. (NYSE:HRI), Grocery Outlet Holding Corp. (NASDAQ:GO), Hillenbrand, Inc. (NYSE:HI), and Intra-Cellular Therapies Inc (NASDAQ:ITCI). All of these stocks’ market caps match SAGE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JJSF | 15 | 70134 | 0 |
| LCII | 15 | 109332 | -3 |
| WD | 11 | 78419 | -8 |
| HRI | 20 | 1070371 | 3 |
| GO | 13 | 42791 | -2 |
| HI | 14 | 23903 | -1 |
| ITCI | 23 | 379057 | 8 |
| Average | 15.9 | 253430 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $258 million in SAGE’s case. Intra-Cellular Therapies Inc (NASDAQ:ITCI) is the most popular stock in this table. On the other hand Walker & Dunlop Inc. (NYSE:WD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks SAGE Therapeutics Inc (NASDAQ:SAGE) is more popular among hedge funds. Our overall hedge fund sentiment score for SAGE is 76.3. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately SAGE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SAGE were disappointed as the stock returned -20.9% since the end of the second quarter (through 10/15) 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 since 2019.
Follow Sage Therapeutics Inc. (NASDAQ:SAGE)
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Disclosure: None. This article was originally published at Insider Monkey.
