It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren't usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index's returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you'd fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of more than 8 percentage points so far in 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That's why we are going to go over recent hedge fund activity in Ionis Pharmaceuticals, Inc. (NASDAQ:IONS).
Is Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) going to take off soon? The smart money is taking a bullish view. The number of long hedge fund bets moved up by 7 lately. Our calculations also showed that IONS 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.
At the moment there are numerous signals investors put to use to evaluate their holdings. A duo of the most under-the-radar signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outclass the broader indices by a healthy amount (see the details here).
[caption id="attachment_673876" align="aligncenter" width="473"] John Overdeck of Two Sigma Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's take a peek at the latest hedge fund action encompassing Ionis Pharmaceuticals, Inc. (NASDAQ:IONS).
What does smart money think about Ionis Pharmaceuticals, Inc. (NASDAQ:IONS)?
Heading into the fourth quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 39% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IONS over the last 17 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), worth close to $108.6 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $96.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish include Mark Lampert's Biotechnology Value Fund, David E. Shaw's D E Shaw and Hal Mintz's Sabby Capital. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), around 9.81% of its portfolio. Biotechnology Value Fund is also relatively very bullish on the stock, earmarking 5.89 percent of its 13F equity portfolio to IONS.
Consequently, some big names have been driving this bullishness. Biotechnology Value Fund, managed by Mark Lampert, assembled the most outsized position in Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). Biotechnology Value Fund had $56 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin's Great Point Partners also initiated a $16.2 million position during the quarter. The following funds were also among the new IONS investors: Dmitry Balyasny's Balyasny Asset Management, Israel Englander's Millennium Management, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) but similarly valued. These stocks are Nordson Corporation (NASDAQ:NDSN), Aspen Technology, Inc. (NASDAQ:AZPN), Westlake Chemical Corporation (NYSE:WLK), and Cognex Corporation (NASDAQ:CGNX). This group of stocks' market valuations are similar to IONS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NDSN,15,43658,-2 AZPN,28,1267011,2 WLK,18,352906,-5 CGNX,18,179338,5 Average,19.75,460728,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $379 million in IONS's case. Aspen Technology, Inc. (NASDAQ:AZPN) is the most popular stock in this table. On the other hand Nordson Corporation (NASDAQ:NDSN) is the least popular one with only 15 bullish hedge fund positions. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) 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 IONS, though not to the same extent, as the stock returned 6.8% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.