Were Hedge Funds Right About Aeglea BioTherapeutics, Inc. (AGLE)?

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 Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) in this article.

Hedge fund interest in Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that AGLE isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 PennantPark Investment Corp. (NASDAQ:PNNT), Spark Energy, Inc. (NASDAQ:SPKE), and Tufin Software Technologies Ltd. (NYSE:TUFN) to gather more data points.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we’re going to go over the new hedge fund action regarding Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE).

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

At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AGLE over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, OrbiMed Advisors was the largest shareholder of Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), with a stake worth $31.8 million reported as of the end of March. Trailing OrbiMed Advisors was Baker Bros. Advisors, which amassed a stake valued at $27 million. Adage Capital Management, Nantahala Capital Management, and Rock Springs 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 Samsara BioCapital allocated the biggest weight to Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE), around 1.29% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, earmarking 0.82 percent of its 13F equity portfolio to AGLE.

Judging by the fact that Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers that elected to cut their entire stakes by the end of the first quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $9.8 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $0.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks similar to Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE). We will take a look at PennantPark Investment Corp. (NASDAQ:PNNT), Spark Energy, Inc. (NASDAQ:SPKE), Tufin Software Technologies Ltd. (NYSE:TUFN), Regional Management Corp (NYSE:RM), Landos Biopharma, Inc. (NASDAQ:LABP), Haynes International, Inc. (NASDAQ:HAYN), and Cytosorbents Corp (NASDAQ:CTSO). All of these stocks’ market caps resemble AGLE’s market cap.

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As you can see these stocks had an average of 8.3 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $153 million in AGLE’s case. Landos Biopharma, Inc. (NASDAQ:LABP) is the most popular stock in this table. On the other hand Spark Energy, Inc. (NASDAQ:SPKE) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Aeglea BioTherapeutics, Inc. (NASDAQ:AGLE) is more popular among hedge funds. Our overall hedge fund sentiment score for AGLE is 79.5. 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. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately AGLE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AGLE were disappointed as the stock returned -17.2% since the end of the first quarter (through 7/23) 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.

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

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