World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Is Myriad Genetics, Inc. (NASDAQ:MYGN) a good investment right now? Investors who are in the know are turning less bullish. The number of bullish hedge fund positions decreased by 2 recently. Our calculations also showed that MYGN isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to 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 has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the key hedge fund action encompassing Myriad Genetics, Inc. (NASDAQ:MYGN).
How have hedgies been trading Myriad Genetics, Inc. (NASDAQ:MYGN)?
Heading into the third quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MYGN over the last 16 quarters. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D. E. Shaw's D E Shaw has the largest position in Myriad Genetics, Inc. (NASDAQ:MYGN), worth close to $92.3 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $47.7 million position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish include Steve Cohen's Point72 Asset Management, Ken Grossman and Glen Schneider's SG Capital Management and Cliff Asness's AQR Capital Management.
Seeing as Myriad Genetics, Inc. (NASDAQ:MYGN) has experienced a decline in interest from hedge fund managers, it's easy to see that there exists a select few funds that decided to sell off their entire stakes heading into Q3. Interestingly, Mitchell Blutt's Consonance Capital Management said goodbye to the largest investment of the "upper crust" of funds followed by Insider Monkey, comprising about $109.9 million in call options. Kevin Kotler's fund, Broadfin Capital, also dropped its call options, about $16.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds heading into Q3.
Let's check out hedge fund activity in other stocks similar to Myriad Genetics, Inc. (NASDAQ:MYGN). These stocks are Norbord Inc. (NYSE:OSB), Avanos Medical, Inc. (NYSE:AVNS), Wageworks Inc (NYSE:WAGE), and Conduent Incorporated (NYSE:CNDT). All of these stocks' market caps resemble MYGN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSB,6,13327,-1 AVNS,11,83258,0 WAGE,21,254378,0 CNDT,27,591464,-3 Average,16.25,235607,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $214 million in MYGN's case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand Norbord Inc. (NYSE:OSB) is the least popular one with only 6 bullish hedge fund positions. Myriad Genetics, Inc. (NASDAQ:MYGN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on MYGN, though not to the same extent, as the stock returned 3.1% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.