Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Is Akcea Therapeutics, Inc. (NASDAQ:AKCA) 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.
Akcea Therapeutics, Inc. (NASDAQ:AKCA) was in 10 hedge funds’ portfolios at the end of the fourth quarter of 2019. AKCA shareholders have witnessed an increase in hedge fund sentiment recently. There were 5 hedge funds in our database with AKCA holdings at the end of the previous quarter. Our calculations also showed that AKCA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
According to most traders, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our researchers hone in on the leaders of this group, about 850 funds. These money managers manage the lion’s share of all hedge funds’ total capital, and by paying attention to their highest performing equity investments, Insider Monkey has found various investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to analyze the latest hedge fund action surrounding Akcea Therapeutics, Inc. (NASDAQ:AKCA).
How have hedgies been trading Akcea Therapeutics, Inc. (NASDAQ:AKCA)?
Heading into the first quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 100% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in AKCA over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Akcea Therapeutics, Inc. (NASDAQ:AKCA), which was worth $4.9 million at the end of the third quarter. On the second spot was Point72 Asset Management which amassed $4.3 million worth of shares. D E Shaw, Millennium Management, and Renaissance Technologies 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 Motley Fool Asset Management allocated the biggest weight to Akcea Therapeutics, Inc. (NASDAQ:AKCA), around 0.11% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to AKCA.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, initiated the biggest position in Akcea Therapeutics, Inc. (NASDAQ:AKCA). Point72 Asset Management had $4.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Donald Sussman’s Paloma Partners, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Akcea Therapeutics, Inc. (NASDAQ:AKCA) but similarly valued. These stocks are TTM Technologies, Inc. (NASDAQ:TTMI), S & T Bancorp Inc (NASDAQ:STBA), Linx S.A. (NYSE:LINX), and Enerplus Corp (NYSE:ERF). This group of stocks’ market values are similar to AKCA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTMI | 11 | 30761 | -1 |
| STBA | 9 | 8690 | -2 |
| LINX | 4 | 31516 | -1 |
| ERF | 20 | 168554 | 3 |
| Average | 11 | 59880 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $17 million in AKCA’s case. Enerplus Corp (NYSE:ERF) is the most popular stock in this table. On the other hand Linx S.A. (NYSE:LINX) is the least popular one with only 4 bullish hedge fund positions. Akcea Therapeutics, Inc. (NASDAQ:AKCA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but still beat the market by 4.2 percentage points. A small number of hedge funds were also right about betting on AKCA as the stock returned -7% during the same time period and outperformed the market by an even larger margin.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
