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Hedge Funds Have Never Been Less Bullish On Agenus Inc (AGEN)

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You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Is Agenus Inc (NASDAQ:AGEN) a bargain? Money managers are in a bearish mood. The number of long hedge fund positions dropped by 1 in recent months. Our calculations also showed that AGEN isn't among the 30 most popular stocks among hedge funds (see the video below). AGEN was in 6 hedge funds' portfolios at the end of June. There were 7 hedge funds in our database with AGEN positions at the end of the previous quarter.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Sander Gerber of Hudson Bay Capital
Sander Gerber of Hudson Bay Capital

Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. Let's check out the fresh hedge fund action encompassing Agenus Inc (NASDAQ:AGEN).

What does smart money think about Agenus Inc (NASDAQ:AGEN)?

At the end of the second quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the first quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in AGEN a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

No of Hedge Funds with AGEN Positions
No of Hedge Funds with AGEN Positions

When looking at the institutional investors followed by Insider Monkey, D. E. Shaw's D E Shaw has the largest position in Agenus Inc (NASDAQ:AGEN), worth close to $8.9 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $3.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions comprise Paul Marshall and Ian Wace's Marshall Wace LLP, Sander Gerber's Hudson Bay Capital Management and John Overdeck and David Siegel's Two Sigma Advisors.

Judging by the fact that Agenus Inc (NASDAQ:AGEN) has experienced falling interest from hedge fund managers, it's safe to say that there were a few hedgies that slashed their entire stakes in the second quarter. At the top of the heap, Renaissance Technologies dropped the biggest stake of the 750 funds watched by Insider Monkey, worth about $0.1 million in stock. Ken Fisher's fund, Fisher Asset Management, also sold off its stock, about $0 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the second quarter.

Let's go over hedge fund activity in other stocks similar to Agenus Inc (NASDAQ:AGEN). These stocks are Inseego Corp. (NASDAQ:INSG), MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT), Motorcar Parts of America, Inc. (NASDAQ:MPAA), and Albireo Pharma, Inc. (NASDAQ:ALBO). All of these stocks' market caps are closest to AGEN's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INSG,8,21906,-7 MCFT,17,91965,1 MPAA,13,93803,4 ALBO,12,95008,-1 Average,12.5,75671,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $14 million in AGEN's case. MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) is the most popular stock in this table. On the other hand Inseego Corp. (NASDAQ:INSG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Agenus Inc (NASDAQ:AGEN) is even less popular than INSG. Hedge funds dodged a bullet by taking a bearish stance towards AGEN. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately AGEN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); AGEN investors were disappointed as the stock returned -14% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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