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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Agile Therapeutics Inc (NASDAQ:AGRX).
Is AGRX a good stock to buy? Agile Therapeutics Inc (NASDAQ:AGRX) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. Agile Therapeutics Inc (NASDAQ:AGRX) was in 6 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 15. Our calculations also showed that AGRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
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 let's take a look at the recent hedge fund action surrounding Agile Therapeutics Inc (NASDAQ:AGRX).
Do Hedge Funds Think AGRX Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in AGRX a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
More specifically, Perceptive Advisors was the largest shareholder of Agile Therapeutics Inc (NASDAQ:AGRX), with a stake worth $33.1 million reported as of the end of March. Trailing Perceptive Advisors was Renaissance Technologies, which amassed a stake valued at $0.8 million. Two Sigma Advisors, Citadel Investment Group, and Citadel Investment Group 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 Perceptive Advisors allocated the biggest weight to Agile Therapeutics Inc (NASDAQ:AGRX), around 0.42% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, designating 0.0019 percent of its 13F equity portfolio to AGRX.
Since Agile Therapeutics Inc (NASDAQ:AGRX) has faced declining sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of funds who sold off their full holdings last quarter. Interestingly, Dov Gertzulin's DG Capital Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, comprising close to $0.6 million in stock, and Chuck Royce's Royce & Associates was right behind this move, as the fund sold off about $0.3 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Agile Therapeutics Inc (NASDAQ:AGRX). We will take a look at ConforMIS, Inc. (NASDAQ:CFMS), Hill International Inc (NYSE:HIL), Codorus Valley Bancorp, Inc. (NASDAQ:CVLY), Strattec Security Corp. (NASDAQ:STRT), Chiasma Inc (NASDAQ:CHMA), Ramaco Resources, Inc. (NASDAQ:METC), and 1st Constitution Bancorp (NASDAQ:FCCY). This group of stocks' market valuations resemble AGRX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CFMS,13,36759,9 HIL,7,47961,-2 CVLY,3,23728,0 STRT,7,33026,-1 CHMA,12,32234,-2 METC,5,1467,0 FCCY,1,2419,-1 Average,6.9,25371,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.9 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $35 million in AGRX's case. ConforMIS, Inc. (NASDAQ:CFMS) is the most popular stock in this table. On the other hand 1st Constitution Bancorp (NASDAQ:FCCY) is the least popular one with only 1 bullish hedge fund positions. Agile Therapeutics Inc (NASDAQ:AGRX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AGRX is 35.8. 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 AGRX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AGRX investors were disappointed as the stock returned -35.1% 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.