Which of These Two Trending Stocks Hedge Funds Like More?

Shares of Ralph Lauren Corp (NYSE:RL) and Novavax, Inc. (NASDAQ:NVAX) both popped in after-hours trading on Tuesday on the back of announcements that appeared to be welcomed by the market. Ralph Lauren announced that its eponymous founder and top executive will hand over the chief executive post to former Old Navy and H&M executive Stefan Larsson. Meanwhile, Novavax said that a mid-stage study showed that its vaccine for the respiratory syncytial virus was safe for pregnant women, immunizing both mothers and their infants. Let’s take a closer look at the recent developments for both companies and assess whether hedge funds see a long-term potential in these companies.

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Ralph Lauren Corp (NYSE:RL) has announced the appointment of Stefan Larsson as its chief executive officer, after being global brand president of Old Navy since 2012, revitalizing the once struggling Gap, Inc. (NYSE:GPS)’s brand. Ralph Lauren, the iconic founder of the company, will be executive chairman and chief creative officer, which means that the 75-year-old designer still wields a considerable amount of control in his firm. Before reviving Old Navy, Larsson spent 15 years at H&M, laying the foundation of this Swedish cheap chic fashion business’ global rise. Larsson is expected to lead Ralph Lauren in a fast-changing fashion business environment. His appointment followed the hiring of Yves Saint Laurent CEO Valerie Hermann last year to become Ralph Lauren’s president in the luxury segment. The fashion firm has also been creating new labels to extend their reach and remain relevant.

Hedge funds, however, are not fond of Ralph Lauren Corp (NYSE:RL), whose stock has plunged by over 44% year-to-date. There were 28 hedge funds from our database with long positions in Ralph Lauren at the end of June, seven less than the preceding quarter. While the company’s stock was essentially flat during the second quarter, the value of hedge funds positions decreased by 8.94% to $610.63 million. Nonetheless, hedge funds held 7.70% of Ralph Lauren at the end of June. Cliff Asness’ AQR Capital Management owned 847,362 shares of Ralph Lauren at the end of June, after more than doubling its stake during the quarter.

Novavax, Inc. (NASDAQ:NVAX), on the other hand, announced that its respiratory syncytial virus (RSV) vaccine has shown to be safe for pregnant women and provided immunization to the patients and their unborn children. The results of the study appeared to have fazed the market in Tuesday trading, leading to the stock rising nearly 10% in pre-market. The vaccine at the center of the news aims to treat RSV, which was discovered in humans in 1957. Another vaccine was trialed nearly half a century ago, but it resulted in the death of two toddlers, Reuters reported. The virus primarily affects children and elders and represents a market opportunity of $1 billion in the U.S. and $2 billion outside of the U.S., the source said, citing data from Wedbush Securities. Additionally, the Bill & Melinda Gates Foundation has also given an $89 million grant to Novavax for a Phase 3 study of the vaccine in pregnant women to be conducted in the first trimester of 2016.

Novavax, Inc. (NASDAQ:NVAX)’s announcement and the positive reaction of the market is parallel to how hedge funds are treating the stock. There were 17 hedge funds long Novavax at the end of June, one less than the first quarter, according to our database. However, the value of these funds’ positions went up by 64.65% on the quarter to $119.07 million, equal to 4% of the company, fueled by a 34.70% increase of the stock in the second quarter. Julian and Felix Bakers’ Baker Bros. Advisors owned 1.95 million shares of Novavax at the end of June.

Disclosure: None