Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 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 Seagen Inc. (NASDAQ:SGEN) in this article.
Is Seagen Inc. (NASDAQ:SGEN) a buy here? Money managers were in a bullish mood. The number of bullish hedge fund positions inched up by 11 lately. Seagen Inc. (NASDAQ:SGEN) was in 38 hedge funds’ portfolios at the end of June. The all time high for this statistics is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SGEN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 58 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.
Felix Baker of Baker Bros.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now let’s take a peek at the new hedge fund action surrounding Seagen Inc. (NASDAQ:SGEN).
What have hedge funds been doing with Seagen Inc. (NASDAQ:SGEN)?
At Q2’s end, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SGEN over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Seagen Inc. (NASDAQ:SGEN) was held by Baker Bros. Advisors, which reported holding $8032 million worth of stock at the end of June. It was followed by Woodline Partners with a $59.9 million position. Other investors bullish on the company included Renaissance Technologies, Rock Springs Capital Management, and Zevenbergen Capital Investments. In terms of the portfolio weights assigned to each position Baker Bros. Advisors allocated the biggest weight to Seagen Inc. (NASDAQ:SGEN), around 35.43% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, dishing out 2.37 percent of its 13F equity portfolio to SGEN.
Consequently, key hedge funds were breaking ground themselves. Zevenbergen Capital Investments, managed by Nancy Zevenbergen, established the largest position in Seagen Inc. (NASDAQ:SGEN). Zevenbergen Capital Investments had $42.3 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $11.7 million position during the quarter. The following funds were also among the new SGEN investors: Peter Muller’s PDT Partners, Bhagwan Jay Rao’s Integral Health Asset Management, and Principal Global Investors’s Columbus Circle Investors.
Let’s now review hedge fund activity in other stocks similar to Seagen Inc. (NASDAQ:SGEN). These stocks are Synopsys, Inc. (NASDAQ:SNPS), Brown-Forman Corporation (NYSE:BF), Chipotle Mexican Grill, Inc. (NYSE:CMG), The Travelers Companies Inc (NYSE:TRV), ZTO Express (Cayman) Inc. (NYSE:ZTO), Eversource Energy (NYSE:ES), and Capital One Financial Corp. (NYSE:COF). All of these stocks’ market caps resemble SGEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNPS | 34 | 931266 | 3 |
| BF | 28 | 521945 | 0 |
| CMG | 41 | 3780591 | -7 |
| TRV | 28 | 398629 | -1 |
| ZTO | 18 | 715518 | 3 |
| ES | 28 | 501377 | 2 |
| COF | 55 | 1908354 | 5 |
| Average | 33.1 | 1251097 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.1 hedge funds with bullish positions and the average amount invested in these stocks was $1251 million. That figure was $8430 million in SGEN’s case. Capital One Financial Corp. (NYSE:COF) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 18 bullish hedge fund positions. Seagen Inc. (NASDAQ:SGEN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SGEN is 67. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately SGEN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SGEN were disappointed as the stock returned -1.8% since the end of June (through 10/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
