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At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Allogene Therapeutics, Inc. (NASDAQ:ALLO) makes for a good investment right now.
Is Allogene Therapeutics, Inc. (NASDAQ:ALLO) a healthy stock for your portfolio? Prominent investors are in a bearish mood. The number of long hedge fund positions dropped by 3 lately. Our calculations also showed that ALLO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a multitude of formulas investors have at their disposal to value their holdings. A pair of the most useful formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the best money managers can trounce the broader indices by a significant margin (see the details here).
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Ken Griffin of Citadel Investment Group[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to view the latest hedge fund action surrounding Allogene Therapeutics, Inc. (NASDAQ:ALLO).
How are hedge funds trading Allogene Therapeutics, Inc. (NASDAQ:ALLO)?
Heading into the fourth quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in ALLO over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Perceptive Advisors, managed by Joseph Edelman, holds the largest position in Allogene Therapeutics, Inc. (NASDAQ:ALLO). Perceptive Advisors has a $42.1 million position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is venBio Select Advisor, managed by Behzad Aghazadeh, which holds a $30.8 million position; 1.3% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Leonard A. Potter's Wildcat Capital Management, Ken Griffin's Citadel Investment Group and Guy Shahar's DSAM Partners. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to Allogene Therapeutics, Inc. (NASDAQ:ALLO), around 10.49% of its 13F portfolio. venBio Select Advisor is also relatively very bullish on the stock, setting aside 1.28 percent of its 13F equity portfolio to ALLO.
Seeing as Allogene Therapeutics, Inc. (NASDAQ:ALLO) has witnessed a decline in interest from hedge fund managers, logic holds that there lies a certain "tier" of hedge funds who sold off their full holdings by the end of the third quarter. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace dumped the biggest position of the 750 funds followed by Insider Monkey, valued at an estimated $0.5 million in stock, and Noam Gottesman's GLG Partners was right behind this move, as the fund cut about $0.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Allogene Therapeutics, Inc. (NASDAQ:ALLO) but similarly valued. We will take a look at MFA Financial, Inc. (NYSE:MFA), American States Water Company (NYSE:AWR), TopBuild Corp (NYSE:BLD), and Legg Mason, Inc. (NYSE:LM). This group of stocks' market valuations are closest to ALLO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MFA,17,97442,0 AWR,14,83986,0 BLD,17,123127,3 LM,25,466189,7 Average,18.25,192686,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $110 million in ALLO's case. Legg Mason, Inc. (NYSE:LM) is the most popular stock in this table. On the other hand American States Water Company (NYSE:AWR) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Allogene Therapeutics, Inc. (NASDAQ:ALLO) is even less popular than AWR. Hedge funds dodged a bullet by taking a bearish stance towards ALLO. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ALLO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ALLO investors were disappointed as the stock returned 3.4% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.