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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Ascendis Pharma A/S (NASDAQ:ASND) based on that data and determine whether they were really smart about the stock.
Ascendis Pharma A/S (NASDAQ:ASND) was in 31 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. ASND shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 33 hedge funds in our database with ASND holdings at the end of March. Our calculations also showed that ASND isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Now let's take a peek at the recent hedge fund action surrounding Ascendis Pharma A/S (NASDAQ:ASND).
How have hedgies been trading Ascendis Pharma A/S (NASDAQ:ASND)?
At the end of June, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the first quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in ASND a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Ascendis Pharma A/S (NASDAQ:ASND) was held by RA Capital Management, which reported holding $726.9 million worth of stock at the end of September. It was followed by Baker Bros. Advisors with a $501.4 million position. Other investors bullish on the company included Vivo Capital, Avoro Capital Advisors (venBio Select Advisor), and OrbiMed Advisors. In terms of the portfolio weights assigned to each position Vivo Capital allocated the biggest weight to Ascendis Pharma A/S (NASDAQ:ASND), around 19.06% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, designating 14.16 percent of its 13F equity portfolio to ASND.
Since Ascendis Pharma A/S (NASDAQ:ASND) has faced bearish sentiment from hedge fund managers, logic holds that there were a few hedgies who were dropping their full holdings last quarter. Intriguingly, Arsani William's Logos Capital cut the biggest stake of all the hedgies watched by Insider Monkey, valued at about $13.5 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund dropped about $8.2 million worth. These bearish behaviors are important to note, as aggregate 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 Ascendis Pharma A/S (NASDAQ:ASND) but similarly valued. These stocks are JOYY Inc. (NASDAQ:YY), Nuance Communications Inc. (NASDAQ:NUAN), The Toro Company (NYSE:TTC), Lincoln National Corporation (NYSE:LNC), Bill.com Holdings, Inc. (NYSE:BILL), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), and Bright Horizons Family Solutions Inc (NYSE:BFAM). All of these stocks' market caps are closest to ASND's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YY,28,585906,13 NUAN,44,1827721,2 TTC,31,702703,7 LNC,34,493924,8 BILL,52,1196788,30 KNX,39,466487,7 BFAM,30,217350,3 Average,36.9,784411,10 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.9 hedge funds with bullish positions and the average amount invested in these stocks was $784 million. That figure was $2510 million in ASND's case. Bill.com Holdings, Inc. (NYSE:BILL) is the most popular stock in this table. On the other hand JOYY Inc. (NASDAQ:YY) is the least popular one with only 28 bullish hedge fund positions. Ascendis Pharma A/S (NASDAQ:ASND) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ASND is 33.7. 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 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately ASND wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ASND investors were disappointed as the stock returned -0.6% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.