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 Myovant Sciences Ltd. (NYSE:MYOV).
Is Myovant Sciences Ltd. (NYSE:MYOV) a cheap stock to buy now? The smart money is betting on the stock. The number of long hedge fund positions moved up by 6 recently. Our calculations also showed that MYOV isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). MYOV was in 14 hedge funds' portfolios at the end of September. There were 8 hedge funds in our database with MYOV positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_261250" align="aligncenter" width="450"] Peter Kolchinsky of RA Capital 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. We're going to take a gander at the recent hedge fund action encompassing Myovant Sciences Ltd. (NYSE:MYOV).
Hedge fund activity in Myovant Sciences Ltd. (NYSE:MYOV)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 75% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in MYOV 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.
More specifically, RA Capital Management was the largest shareholder of Myovant Sciences Ltd. (NYSE:MYOV), with a stake worth $32.1 million reported as of the end of September. Trailing RA Capital Management was Rock Springs Capital Management, which amassed a stake valued at $2.3 million. Great Point Partners, Platinum Asset Management, and Point72 Asset Management 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 RA Capital Management allocated the biggest weight to Myovant Sciences Ltd. (NYSE:MYOV), around 1.91% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, setting aside 0.16 percent of its 13F equity portfolio to MYOV.
As aggregate interest increased, some big names were leading the bulls' herd. Great Point Partners, managed by Jeffrey Jay and David Kroin, assembled the biggest position in Myovant Sciences Ltd. (NYSE:MYOV). Great Point Partners had $1.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace's Marshall Wace also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Peter Muller's PDT Partners, David Harding's Winton Capital Management, and David E. Shaw's D E Shaw.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Myovant Sciences Ltd. (NYSE:MYOV) but similarly valued. We will take a look at Akebia Therapeutics Inc (NASDAQ:AKBA), Gilat Satellite Networks Ltd. (NASDAQ:GILT), Forterra, Inc. (NASDAQ:FRTA), and Matrix Service Co (NASDAQ:MTRX). All of these stocks' market caps are similar to MYOV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AKBA,15,156509,1 GILT,2,25553,0 FRTA,13,73440,2 MTRX,19,28483,5 Average,12.25,70996,2 [/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 $71 million. That figure was $40 million in MYOV's case. Matrix Service Co (NASDAQ:MTRX) is the most popular stock in this table. On the other hand Gilat Satellite Networks Ltd. (NASDAQ:GILT) is the least popular one with only 2 bullish hedge fund positions. Myovant Sciences Ltd. (NYSE:MYOV) 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 MYOV as the stock returned 242.5% 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.