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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Flexion Therapeutics Inc (NASDAQ:FLXN).
Flexion Therapeutics Inc (NASDAQ:FLXN) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 17. FLXN has seen an increase in activity from the world's largest hedge funds recently. There were 12 hedge funds in our database with FLXN holdings at the end of December. Our calculations also showed that FLXN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we're going to take a look at the new hedge fund action surrounding Flexion Therapeutics Inc (NASDAQ:FLXN).
Do Hedge Funds Think FLXN Is A Good Stock To Buy Now?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the fourth quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in FLXN a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Miller Value Partners was the largest shareholder of Flexion Therapeutics Inc (NASDAQ:FLXN), with a stake worth $36.7 million reported as of the end of March. Trailing Miller Value Partners was OrbiMed Advisors, which amassed a stake valued at $20.7 million. Clearline Capital, Kingdon Capital, 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 Clearline Capital allocated the biggest weight to Flexion Therapeutics Inc (NASDAQ:FLXN), around 1.63% of its 13F portfolio. Kingdon Capital is also relatively very bullish on the stock, dishing out 0.98 percent of its 13F equity portfolio to FLXN.
Consequently, specific money managers were breaking ground themselves. Clearline Capital, managed by Marc Majzner, established the largest position in Flexion Therapeutics Inc (NASDAQ:FLXN). Clearline Capital had $12.6 million invested in the company at the end of the quarter. Guy Levy's Soleus Capital also initiated a $4.7 million position during the quarter. The following funds were also among the new FLXN investors: Peter Muller's PDT Partners, Paul Marshall and Ian Wace's Marshall Wace LLP, and Greg Eisner's Engineers Gate Manager.
Let's go over hedge fund activity in other stocks similar to Flexion Therapeutics Inc (NASDAQ:FLXN). These stocks are Lucira Health, Inc. (NASDAQ:LHDX), Jiayin Group Inc. (NASDAQ:JFIN), Sensei Biotherapeutics, Inc. (NASDAQ:SNSE), MedAvail Holdings, Inc (NASDAQ:MDVL), Reading International Inc (NASDAQ:RDIB), Guaranty Bancshares, Inc. (NASDAQ:GNTY), and Sabine Royalty Trust (NYSE:SBR). This group of stocks' market values resemble FLXN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LHDX,8,12815,8 JFIN,2,521,-1 SNSE,12,26295,12 MDVL,9,245995,1 RDIB,1,240,0 GNTY,1,2685,-2 SBR,5,13544,1 Average,5.4,43156,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $108 million in FLXN's case. Sensei Biotherapeutics, Inc. (NASDAQ:SNSE) is the most popular stock in this table. On the other hand Reading International Inc (NASDAQ:RDIB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Flexion Therapeutics Inc (NASDAQ:FLXN) is more popular among hedge funds. Our overall hedge fund sentiment score for FLXN is 87.2. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately FLXN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on FLXN were disappointed as the stock returned -28.7% since the end of the first quarter (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.