Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Repligen Corporation (NASDAQ:RGEN) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Hedge fund interest in Repligen Corporation (NASDAQ:RGEN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that RGEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare RGEN to other stocks including Olaplex Holdings Inc. (NASDAQ:OLPX), WPP Plc (NASDAQ:WPP), and James Hardie Industries plc (NYSE:JHX) to get a better sense of its popularity.
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 peek at the recent hedge fund action surrounding Repligen Corporation (NASDAQ:RGEN).
Do Hedge Funds Think RGEN Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 35 hedge funds held shares or bullish call options in RGEN a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Repligen Corporation (NASDAQ:RGEN) was held by Select Equity Group, which reported holding $371.6 million worth of stock at the end of September. It was followed by 12 West Capital Management with a $295.2 million position. Other investors bullish on the company included Impax Asset Management, Marshall Wace LLP, and Echo Street Capital Management. In terms of the portfolio weights assigned to each position 12 West Capital Management allocated the biggest weight to Repligen Corporation (NASDAQ:RGEN), around 13.47% of its 13F portfolio. Miura Global Management is also relatively very bullish on the stock, setting aside 3.81 percent of its 13F equity portfolio to RGEN.
Judging by the fact that Repligen Corporation (NASDAQ:RGEN) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedge funds who were dropping their entire stakes heading into Q4. Interestingly, Brandon Haley’s Holocene Advisors cut the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $51.3 million in stock, and Joseph Edelman’s Perceptive Advisors was right behind this move, as the fund dropped about $26.5 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Repligen Corporation (NASDAQ:RGEN). These stocks are Olaplex Holdings Inc. (NASDAQ:OLPX), WPP Plc (NASDAQ:WPP), James Hardie Industries plc (NYSE:JHX), Molina Healthcare, Inc. (NYSE:MOH), Quanta Services Inc (NYSE:PWR), IDEX Corporation (NYSE:IEX), and UDR, Inc. (NYSE:UDR). All of these stocks’ market caps match RGEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OLPX | 52 | 710529 | 52 |
| WPP | 5 | 15930 | -1 |
| JHX | 5 | 13962 | 1 |
| MOH | 28 | 1539147 | -6 |
| PWR | 38 | 1526790 | -2 |
| IEX | 18 | 1047528 | -4 |
| UDR | 20 | 353763 | -4 |
| Average | 23.7 | 743950 | 5.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $744 million. That figure was $1500 million in RGEN’s case. Olaplex Holdings Inc. (NASDAQ:OLPX) is the most popular stock in this table. On the other hand WPP Plc (NASDAQ:WPP) is the least popular one with only 5 bullish hedge fund positions. Repligen Corporation (NASDAQ:RGEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGEN is 64.5. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, RGEN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RGEN were disappointed as the stock returned -31.4% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Repligen Corp (NASDAQ:RGEN)
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Disclosure: None. This article was originally published at Insider Monkey.
