The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity 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 September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) based on those filings.
Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) shareholders have witnessed a decrease in activity from the world's largest hedge funds recently. Our calculations also showed that RCKT 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 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_364894" align="alignnone" width="864"] James E. Flynn of Deerfield Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds' buy/sell signals. Let's view the fresh hedge fund action encompassing Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT).
Hedge fund activity in Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT)
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RCKT over the last 17 quarters. 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, Tang Capital Management held the most valuable stake in Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), which was worth $34.5 million at the end of the third quarter. On the second spot was Cormorant Asset Management which amassed $24.7 million worth of shares. Perceptive Advisors, Deerfield Management, 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 Tang Capital Management allocated the biggest weight to Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), around 5.91% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, earmarking 1.85 percent of its 13F equity portfolio to RCKT.
Judging by the fact that Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) has faced falling interest from hedge fund managers, we can see that there is a sect of funds that decided to sell off their positions entirely by the end of the third quarter. Interestingly, Phill Gross and Robert Atchinson's Adage Capital Management sold off the largest position of the "upper crust" of funds watched by Insider Monkey, totaling about $32.4 million in stock. Roberto Mignone's fund, Bridger Management, also said goodbye to its stock, about $18.7 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT). These stocks are OneSpan Inc. (NASDAQ:OSPN), Renewable Energy Group Inc (NASDAQ:REGI), Hersha Hospitality Trust (NYSE:HT), and CorePoint Lodging Inc. (NYSE:CPLG). All of these stocks' market caps are similar to RCKT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSPN,10,70375,0 REGI,16,89440,-1 HT,13,17504,1 CPLG,10,32667,2 Average,12.25,52497,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $138 million in RCKT's case. Renewable Energy Group Inc (NASDAQ:REGI) is the most popular stock in this table. On the other hand OneSpan Inc. (NASDAQ:OSPN) is the least popular one with only 10 bullish hedge fund positions. Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on RCKT as the stock returned 51% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.