Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Schrodinger, Inc. (NASDAQ:SDGR) in this article.
Schrodinger, Inc. (NASDAQ:SDGR) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 24. SDGR shareholders have witnessed an increase in hedge fund sentiment lately. There were 17 hedge funds in our database with SDGR holdings at the end of March. Our calculations also showed that SDGR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
John Overdeck of Two Sigma Advisors
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 are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to check out the latest hedge fund action regarding Schrodinger, Inc. (NASDAQ:SDGR).
Do Hedge Funds Think SDGR Is A Good Stock To Buy Now?
At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the first quarter of 2020. By comparison, 15 hedge funds held shares or bullish call options in SDGR a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Bill & Melinda Gates Foundation Trust was the largest shareholder of Schrodinger, Inc. (NASDAQ:SDGR), with a stake worth $527.9 million reported as of the end of June. Trailing Bill & Melinda Gates Foundation Trust was ARK Investment Management, which amassed a stake valued at $197.5 million. Laurion Capital Management, Valiant Capital, and Alkeon Capital Management 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 Valiant Capital allocated the biggest weight to Schrodinger, Inc. (NASDAQ:SDGR), around 3.75% of its 13F portfolio. Bill & Melinda Gates Foundation Trust is also relatively very bullish on the stock, setting aside 2.21 percent of its 13F equity portfolio to SDGR.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Schrodinger, Inc. (NASDAQ:SDGR) headfirst. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, established the largest position in Schrodinger, Inc. (NASDAQ:SDGR). Alkeon Capital Management had $26.5 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $9.5 million position during the quarter. The other funds with brand new SDGR positions are John Overdeck and David Siegel’s Two Sigma Advisors, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), and Greg Poole’s Echo Street Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Schrodinger, Inc. (NASDAQ:SDGR). These stocks are Lancaster Colony Corporation (NASDAQ:LANC), Chart Industries, Inc. (NASDAQ:GTLS), JetBlue Airways Corporation (NASDAQ:JBLU), Inovalon Holdings Inc (NASDAQ:INOV), Ashland Global Holdings Inc.. (NYSE:ASH), Enstar Group Ltd. (NASDAQ:ESGR), and QTS Realty Trust Inc (NYSE:QTS). This group of stocks’ market caps resemble SDGR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LANC | 18 | 294439 | -4 |
| GTLS | 27 | 327346 | 8 |
| JBLU | 30 | 401724 | 1 |
| INOV | 20 | 145599 | 3 |
| ASH | 28 | 933462 | -8 |
| ESGR | 11 | 495727 | 0 |
| QTS | 39 | 1285562 | 17 |
| Average | 24.7 | 554837 | 2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $555 million. That figure was $941 million in SDGR’s case. QTS Realty Trust Inc (NYSE:QTS) is the most popular stock in this table. On the other hand Enstar Group Ltd. (NASDAQ:ESGR) is the least popular one with only 11 bullish hedge fund positions. Schrodinger, Inc. (NASDAQ:SDGR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SDGR is 49.1. 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 negative signal and 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 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately SDGR wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); SDGR investors were disappointed as the stock returned -24.2% since the end of June (through 11/5) 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 in 2021.
Follow Schrodinger Inc. (NASDAQ:SDGR)
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Disclosure: None. This article was originally published at Insider Monkey.
