We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (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. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Myovant Sciences Ltd. (NYSE:MYOV), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Myovant Sciences Ltd. (NYSE:MYOV) going to take off soon? Hedge funds are becoming less hopeful. The number of long hedge fund bets were cut by 6 in recent months. Our calculations also showed that MYOV 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).
Kris Jenner of Rock Springs Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we’re going to take a peek at the fresh hedge fund action regarding Myovant Sciences Ltd. (NYSE:MYOV).
How have hedgies been trading Myovant Sciences Ltd. (NYSE:MYOV)?
At the end of the fourth quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -38% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MYOV over the last 18 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, Cormorant Asset Management was the largest shareholder of Myovant Sciences Ltd. (NYSE:MYOV), with a stake worth $31 million reported as of the end of September. Trailing Cormorant Asset Management was Rock Springs Capital Management, which amassed a stake valued at $7.8 million. Adage Capital Management, Ghost Tree Capital, and Millennium 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 Ghost Tree Capital allocated the biggest weight to Myovant Sciences Ltd. (NYSE:MYOV), around 1.32% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, designating 1.24 percent of its 13F equity portfolio to MYOV.
Since Myovant Sciences Ltd. (NYSE:MYOV) has faced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their full holdings by the end of the third quarter. At the top of the heap, Peter Kolchinsky’s RA Capital Management cut the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $32.1 million in stock. Jeffrey Jay and David Kroin’s fund, Great Point Partners, also dumped its stock, about $1.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Myovant Sciences Ltd. (NYSE:MYOV). These stocks are Alliance Resource Partners, L.P. (NASDAQ:ARLP), Atrion Corporation (NASDAQ:ATRI), EnPro Industries, Inc. (NYSE:NPO), and Air Transport Services Group Inc. (NASDAQ:ATSG). All of these stocks’ market caps are closest to MYOV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARLP | 4 | 60275 | -3 |
| ATRI | 15 | 90026 | -2 |
| NPO | 14 | 173659 | -2 |
| ATSG | 20 | 177122 | 3 |
| Average | 13.25 | 125271 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $66 million in MYOV’s case. Air Transport Services Group Inc. (NASDAQ:ATSG) is the most popular stock in this table. On the other hand Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 4 bullish hedge fund positions. Myovant Sciences Ltd. (NYSE:MYOV) is not the least popular stock in this group but hedge fund interest is still below average. 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 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately MYOV wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MYOV investors were disappointed as the stock returned -28.2% during the same time period 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 most of these stocks already outperformed the market in 2020.
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.
