Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Theratechnologies Inc. (NASDAQ:THTX) to find out whether there were any major changes in hedge funds’ views.
Theratechnologies Inc. (NASDAQ:THTX) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Theratechnologies Inc. (NASDAQ:THTX) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic was 5. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that THTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In today’s marketplace there are many gauges market participants employ to grade their stock investments. A pair of the less utilized gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can beat the broader indices by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Ken Fisher of Fisher Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind we’re going to view the fresh hedge fund action regarding Theratechnologies Inc. (NASDAQ:THTX).
Do Hedge Funds Think THTX Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in THTX over the last 23 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Guy Levy’s Soleus Capital has the largest position in Theratechnologies Inc. (NASDAQ:THTX), worth close to $26.9 million, corresponding to 4.8% of its total 13F portfolio. The second largest stake is held by Orin Hirschman of AIGH Investment Partners, with a $13.8 million position; 2.9% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Soleus Capital allocated the biggest weight to Theratechnologies Inc. (NASDAQ:THTX), around 4.84% of its 13F portfolio. AIGH Investment Partners is also relatively very bullish on the stock, setting aside 2.91 percent of its 13F equity portfolio to THTX.
As aggregate interest increased, some big names were breaking ground themselves. Soleus Capital, managed by Guy Levy, established the most outsized position in Theratechnologies Inc. (NASDAQ:THTX). Soleus Capital had $26.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Theratechnologies Inc. (NASDAQ:THTX) but similarly valued. We will take a look at uCloudlink Group Inc. (NASDAQ:UCL), PowerFleet, Inc. (NASDAQ:PWFL), eGain Corporation (NASDAQ:EGAN), DarioHealth Corp. (NASDAQ:DRIO), Casper Sleep Inc. (NYSE:CSPR), PlayAGS, Inc. (NYSE:AGS), and The Liberty Braves Group (NASDAQ:BATRA). All of these stocks’ market caps match THTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UCL | 1 | 301 | 1 |
| PWFL | 15 | 71698 | 4 |
| EGAN | 8 | 16475 | -7 |
| DRIO | 13 | 65844 | 9 |
| CSPR | 13 | 14552 | 1 |
| AGS | 12 | 47833 | -1 |
| BATRA | 12 | 69160 | 0 |
| Average | 10.6 | 40838 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $43 million in THTX’s case. PowerFleet, Inc. (NASDAQ:PWFL) is the most popular stock in this table. On the other hand uCloudlink Group Inc. (NASDAQ:UCL) is the least popular one with only 1 bullish hedge fund positions. Theratechnologies Inc. (NASDAQ:THTX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for THTX is 53.9. 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 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately THTX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); THTX investors were disappointed as the stock returned 0.5% since the end of March (through 6/25) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
