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Is Arvinas, Inc. (ARVN) Going to Burn These Hedge Funds?

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·5 min read
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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Arvinas, Inc. (NASDAQ:ARVN) based on those filings.

Arvinas, Inc. (NASDAQ:ARVN) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistic is 34. ARVN investors should pay attention to a decrease in activity from the world's largest hedge funds recently. There were 28 hedge funds in our database with ARVN holdings at the end of March. Our calculations also showed that ARVN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most stock holders, hedge funds are viewed as worthless, old financial vehicles of yesteryear. While there are over 8000 funds trading today, Our experts look at the elite of this group, about 850 funds. It is estimated that this group of investors orchestrate most of the smart money's total asset base, and by keeping an eye on their best picks, Insider Monkey has spotted a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Kris Jenner - Rock Springs Capital
Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

With all of this in mind we're going to check out the recent hedge fund action regarding Arvinas, Inc. (NASDAQ:ARVN).

Do Hedge Funds Think ARVN Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in ARVN a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Point72 Asset Management held the most valuable stake in Arvinas, Inc. (NASDAQ:ARVN), which was worth $84.7 million at the end of the second quarter. On the second spot was Rock Springs Capital Management which amassed $48.2 million worth of shares. Marshall Wace LLP, EcoR1 Capital, 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 Ghost Tree Capital allocated the biggest weight to Arvinas, Inc. (NASDAQ:ARVN), around 4.34% of its 13F portfolio. Octagon Capital Advisors is also relatively very bullish on the stock, designating 2.85 percent of its 13F equity portfolio to ARVN.

Because Arvinas, Inc. (NASDAQ:ARVN) has faced bearish sentiment from hedge fund managers, logic holds that there were a few money managers who sold off their positions entirely last quarter. It's worth mentioning that Mitchell Blutt's Consonance Capital Management dumped the biggest stake of the 750 funds monitored by Insider Monkey, comprising an estimated $30.4 million in stock, and Abhishek Trehan's Darwin Global Management was right behind this move, as the fund sold off about $9.3 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Arvinas, Inc. (NASDAQ:ARVN) but similarly valued. We will take a look at Coca-Cola Consolidated Inc. (NASDAQ:COKE), The Macerich Company (NYSE:MAC), Sunoco LP (NYSE:SUN), Kinsale Capital Group, Inc. (NASDAQ:KNSL), Rogers Corporation (NYSE:ROG), CI Financial Corp (NYSE:CIXX), and Franklin Electric Co., Inc. (NASDAQ:FELE). This group of stocks' market values are similar to ARVN's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COKE,16,39804,2 MAC,10,114720,-9 SUN,3,7823,1 KNSL,17,51377,0 ROG,16,159071,-1 CIXX,9,176429,-3 FELE,18,134022,-2 Average,12.7,97607,-1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $358 million in ARVN's case. Franklin Electric Co., Inc. (NASDAQ:FELE) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Arvinas, Inc. (NASDAQ:ARVN) is more popular among hedge funds. Our overall hedge fund sentiment score for ARVN is 75.9. 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. 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 returned 24.9% in 2021 through October 15th but still managed to beat the market by 4.5 percentage points. Hedge funds were also right about betting on ARVN as the stock returned 10.5% since the end of June (through 10/15) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.