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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Agenus Inc (NASDAQ:AGEN).
Is AGEN a good stock to buy now? Prominent investors were cutting their exposure. The number of long hedge fund positions dropped by 2 recently. Agenus Inc (NASDAQ:AGEN) was in 13 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 16. Our calculations also showed that AGEN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with AGEN positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Adam Usdan of Trellus Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind let's analyze the key hedge fund action surrounding Agenus Inc (NASDAQ:AGEN).
Do Hedge Funds Think AGEN Is A Good Stock To Buy Now?
At Q3's end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in AGEN over the last 21 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.
Among these funds, Cormorant Asset Management held the most valuable stake in Agenus Inc (NASDAQ:AGEN), which was worth $34 million at the end of the third quarter. On the second spot was Millennium Management which amassed $9.6 million worth of shares. Ikarian Capital, Trellus Management Company, and Two Sigma Advisors 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 Trellus Management Company allocated the biggest weight to Agenus Inc (NASDAQ:AGEN), around 3.07% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, dishing out 1.31 percent of its 13F equity portfolio to AGEN.
Because Agenus Inc (NASDAQ:AGEN) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of funds that decided to sell off their positions entirely heading into Q4. At the top of the heap, Manfred Yu's Acuta Capital Partners cut the biggest stake of the "upper crust" of funds monitored by Insider Monkey, worth close to $3.7 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds heading into Q4.
Let's also examine hedge fund activity in other stocks similar to Agenus Inc (NASDAQ:AGEN). These stocks are Standex International Corp. (NYSE:SXI), TriCo Bancshares (NASDAQ:TCBK), Tucows Inc. (NASDAQ:TCX), Meridian Bioscience, Inc. (NASDAQ:VIVO), Armada Hoffler Properties Inc (NYSE:AHH), Vaxart, Inc. (NASDAQ:VXRT), and OneSmart International Education Group Limited (NYSE:ONE). This group of stocks' market valuations are closest to AGEN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SXI,11,34962,-1 TCBK,10,22565,-1 TCX,8,73556,-1 VIVO,19,103498,-4 AHH,12,39523,0 VXRT,12,99934,5 ONE,20,169705,14 Average,13.1,77678,1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $58 million in AGEN's case. OneSmart International Education Group Limited (NYSE:ONE) is the most popular stock in this table. On the other hand Tucows Inc. (NASDAQ:TCX) is the least popular one with only 8 bullish hedge fund positions. Agenus Inc (NASDAQ:AGEN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AGEN is 48.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately AGEN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AGEN investors were disappointed as the stock returned -18.3% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.