Wasatch Global Investors, an investment management firm, published its “Wasatch Ultra Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 6.02% was recorded by the fund’s investor class for the Q2 of 2021, beating its benchmark, the Russell 2000 Growth Index, which had a 3.92% gain for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Wasatch Global Investors, the fund mentioned MacroGenics, Inc. (NASDAQ: MGNX) and discussed its stance on the firm. MacroGenics, Inc. is a Rockville, Maryland-based biotechnology company with a $1.3 billion market capitalization. MGNX delivered a -6.30% return since the beginning of the year, while its 12-month returns are down by -13.35%. The stock closed at $21.66 per share on September 21, 2021.
Here is what Wasatch Global Investors has to say about MacroGenics, Inc. in its Q2 2021 investor letter:
“Another weak stock in the Fund was MacroGenics, Inc. (MGNX). A biopharmaceutical company, MacroGenics develops antibody-based therapeutics for the treatment of cancer. Wall Street reacted negatively to preliminary results from the company’s Phase 1 clinical trial of its antibody-drug conjugate (ADC) for the treatment of solid tumors. In particular, side effects experienced by patients during the dose-escalation part of the trial appear to have spooked some investors. We think they are overreacting. In our view, the drug demonstrated anti-tumor activity with a clinically manageable side-effect profile comparable to those of other ADCs.”
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Based on our calculations, MacroGenics, Inc. (NASDAQ: MGNX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MGNX was in 24 hedge fund portfolios at the end of the first half of 2021, compared to 30 funds in the previous quarter. MacroGenics, Inc. (NASDAQ: MGNX) delivered a -16.26% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
