In this article we will take a look at whether hedge funds think SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) was in 14 hedge funds' portfolios at the end of March. SWTX investors should pay attention to an increase in enthusiasm from smart money recently. There were 11 hedge funds in our database with SWTX positions at the end of the previous quarter. Our calculations also showed that SWTX isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a glance at the recent hedge fund action regarding SpringWorks Therapeutics, Inc. (NASDAQ:SWTX).
What does smart money think about SpringWorks Therapeutics, Inc. (NASDAQ:SWTX)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SWTX over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Samuel Isaly's OrbiMed Advisors has the biggest position in SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), worth close to $200 million, comprising 3.4% of its total 13F portfolio. The second largest stake is held by Perceptive Advisors, led by Joseph Edelman, holding a $94.1 million position; 2.5% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish include Mark Lampert's Biotechnology Value Fund / BVF Inc, Ken Griffin's Citadel Investment Group and James E. Flynn's Deerfield Management. In terms of the portfolio weights assigned to each position Samsara BioCapital allocated the biggest weight to SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), around 9.72% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, setting aside 6.96 percent of its 13F equity portfolio to SWTX.
As industrywide interest jumped, key hedge funds have jumped into SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) headfirst. Point72 Asset Management, managed by Steve Cohen, initiated the most outsized position in SpringWorks Therapeutics, Inc. (NASDAQ:SWTX). Point72 Asset Management had $15.4 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker's Woodline Partners also made a $5.7 million investment in the stock during the quarter. The other funds with brand new SWTX positions are Michael Gelband's ExodusPoint Capital and Renaissance Technologies.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) but similarly valued. We will take a look at CBIZ, Inc. (NYSE:CBZ), iRobot Corporation (NASDAQ:IRBT), B&G Foods, Inc. (NYSE:BGS), and Alcoa Corporation (NYSE:AA). This group of stocks' market valuations are similar to SWTX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBZ,10,142017,-3 IRBT,19,38329,6 BGS,13,41372,-2 AA,33,213717,3 Average,18.75,108859,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $481 million in SWTX's case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand CBIZ, Inc. (NYSE:CBZ) is the least popular one with only 10 bullish hedge fund positions. SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) is not the least popular stock in this group but hedge fund interest is still below average. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on SWTX as the stock returned 65% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.