Shares of Novavax, Inc. (NASDAQ:NVAX) soared by more than 8% today after the company said that the U.S. Food and Drug Administration has granted Fast Track Designation to its RSV F-Protein nanoparticle vaccine candidate for older adults. Fast Track designation by the FDA makes the development and final approval process for any drug swift. In a statement, Novavax’s CEO Stanley Erck said that the approval of Fast Track designation for RSV F Vaccine by FDA shows its recognition of RSV as an unmet medical need. According to the estimates by Novavax, approximately 16,000 older adults die of RSV infection every year in the US. This is positive news for hedge funds, taking into account that the stock saw an increase in popularity during the first quarter.
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At the moment there are dozens of methods investors use to assess stocks. Some of the less utilized methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a healthy margin (see the details here).
Keeping this in mind, we’re going to analyze the new action surrounding Novavax, Inc. (NASDAQ:NVAX).
At Q1’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, up by six from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Deerfield Management, managed by James E. Flynn, holds the number one position in Novavax, Inc. (NASDAQ:NVAX). Deerfield Management has a $12.7 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is Baker Bros. Advisors, managed by Julian Baker and Felix Baker, which holds a $12.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include Bihua Chen’s Cormorant Asset Management, Israel Englander’s Millennium Management and Randall Smith’s Alden Global Capital.
Since Novavax saw an increase in popularity, logic holds that several funds jumped into the company headfirst and on the next page we are going to take a look at the most prominent new investors. In addition, at the end of this article we will also compare NVAX to other stocks including Noah Holdings Limited (ADR) (NYSE:NOAH), Old National Bancorp (NYSE:ONB), and Stag Industrial Inc (NYSE:STAG) to get a better sense of its popularity.
Deerfield Management, managed by James E. Flynn, established the most valuable position in Novavax, Inc. (NASDAQ:NVAX). Deerfield Management had $12.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $5.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Randall Smith’s Alden Global Capital, Nathan Fischel’s DAFNA Capital Management, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Novavax, Inc. (NASDAQ:NVAX) but similarly valued. These stocks are Noah Holdings Limited (ADR) (NYSE:NOAH), Old National Bancorp (NYSE:ONB), Stag Industrial Inc (NYSE:STAG), and Advanced Energy Industries, Inc. (NASDAQ:AEIS). All of these stocks’ market caps are similar to NVAX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NOAH | 5 | 45184 | -4 |
| ONB | 11 | 35113 | 3 |
| STAG | 7 | 60005 | -1 |
| AEIS | 18 | 105816 | 0 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $62 million. That figure was $60 million in NVAX’s case. Advanced Energy Industries, Inc. (NASDAQ:AEIS) is the most popular stock in this table. On the other hand Noah Holdings Limited (ADR) (NYSE:NOAH) is the least popular one with only 5 bullish hedge fund positions. Novavax, Inc. (NASDAQ:NVAX) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AEIS might be a better candidate to consider a long position.
Disclosure: None
