Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of argenx SE (NASDAQ:ARGX).
argenx SE (NASDAQ:ARGX) has seen a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that ARGX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are plenty of gauges investors use to grade publicly traded companies. A pair of the best gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass their index-focused peers by a significant margin (see the details here).
[caption id="attachment_221556" align="aligncenter" width="400"] Richard Driehaus of Driehaus Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action encompassing argenx SE (NASDAQ:ARGX).
Hedge fund activity in argenx SE (NASDAQ:ARGX)
Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ARGX over the last 18 quarters. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Redmile Group, managed by Jeremy Green, holds the largest position in argenx SE (NASDAQ:ARGX). Redmile Group has a $142.5 million position in the stock, comprising 4% of its 13F portfolio. Sitting at the No. 2 spot is Baker Bros. Advisors, led by Julian Baker and Felix Baker, holding a $134.3 million position; 0.8% of its 13F portfolio is allocated to the stock. Other peers that hold long positions contain Behzad Aghazadeh's Avoro Capital Advisors (venBio Select Advisor), Richard Driehaus's Driehaus Capital and Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management. In terms of the portfolio weights assigned to each position Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to argenx SE (NASDAQ:ARGX), around 4.16% of its 13F portfolio. Indus Capital is also relatively very bullish on the stock, earmarking 4.09 percent of its 13F equity portfolio to ARGX.
Seeing as argenx SE (NASDAQ:ARGX) has experienced bearish sentiment from the smart money, we can see that there was a specific group of hedgies who sold off their entire stakes in the first quarter. Interestingly, Oleg Nodelman's EcoR1 Capital cut the largest stake of the 750 funds followed by Insider Monkey, totaling about $32.4 million in stock, and Brian Ashford-Russell and Tim Woolley's Polar Capital was right behind this move, as the fund dropped about $15.2 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds in the first quarter.
Let's also examine hedge fund activity in other stocks similar to argenx SE (NASDAQ:ARGX). We will take a look at Elbit Systems Ltd. (NASDAQ:ESLT), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), and Knight-Swift Transportation Holdings Inc. (NYSE:KNX). All of these stocks' market caps are similar to ARGX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESLT,6,13855,3 HZNP,41,1686085,8 JAZZ,29,805357,4 KNX,32,352814,6 Average,27,714528,5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $715 million. That figure was $589 million in ARGX's case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 6 bullish hedge fund positions. argenx SE (NASDAQ:ARGX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on ARGX as the stock returned 73.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.