Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of FibroGen Inc (NASDAQ:FGEN) based on that data and determine whether they were really smart about the stock.
FibroGen Inc (NASDAQ:FGEN) shareholders have witnessed an increase in enthusiasm from smart money of late. FibroGen Inc (NASDAQ:FGEN) was in 25 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FGEN isn't among the 30 most popular stocks among hedge funds (click for Q2 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 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 S&P 500 ETFs by 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 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we're going to take a gander at the recent hedge fund action surrounding FibroGen Inc (NASDAQ:FGEN).
Hedge fund activity in FibroGen Inc (NASDAQ:FGEN)
At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in FGEN a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Hillhouse Capital Management held the most valuable stake in FibroGen Inc (NASDAQ:FGEN), which was worth $160.3 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $65.9 million worth of shares. Renaissance Technologies, Rock Springs Capital Management, and Two Sigma Advisors 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 Hillhouse Capital Management allocated the biggest weight to FibroGen Inc (NASDAQ:FGEN), around 1.47% of its 13F portfolio. Foresite Capital is also relatively very bullish on the stock, setting aside 1.44 percent of its 13F equity portfolio to FGEN.
As aggregate interest increased, key hedge funds have been driving this bullishness. Renaissance Technologies, initiated the most valuable position in FibroGen Inc (NASDAQ:FGEN). Renaissance Technologies had $14.1 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $2.8 million investment in the stock during the quarter. The other funds with brand new FGEN positions are Hal Mintz's Sabby Capital, Benjamin A. Smith's Laurion Capital Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's go over hedge fund activity in other stocks similar to FibroGen Inc (NASDAQ:FGEN). These stocks are Cirrus Logic, Inc. (NASDAQ:CRUS), Silgan Holdings Inc. (NASDAQ:SLGN), Spirit Realty Capital Inc (NYSE:SRC), United Bankshares, Inc. (NASDAQ:UBSI), Equitrans Midstream Corporation (NYSE:ETRN), Valvoline Inc. (NYSE:VVV), and WPX Energy Inc (NYSE:WPX). This group of stocks' market caps are closest to FGEN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRUS,33,315676,5 SLGN,19,183360,3 SRC,18,154998,0 UBSI,16,44023,3 ETRN,29,465675,10 VVV,40,634494,1 WPX,37,230770,8 Average,27.4,289857,4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $290 million. That figure was $311 million in FGEN's case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 16 bullish hedge fund positions. FibroGen Inc (NASDAQ:FGEN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FGEN is 56.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 21.3% in 2020 through September 25th and surpassed the market by 17.7 percentage points. Unfortunately FGEN wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FGEN investors were disappointed as the stock returned 4.3% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.