Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Myriad Genetics, Inc. (NASDAQ:MYGN)? The smart money sentiment can provide an answer to this question.
Is Myriad Genetics, Inc. (NASDAQ:MYGN) a healthy stock for your portfolio? The smart money is in a pessimistic mood. The number of bullish hedge fund positions decreased by 2 in recent months. Our calculations also showed that mygn isn't among the 30 most popular stocks among hedge funds.
In today’s marketplace there are tons of indicators market participants put to use to value publicly traded companies. A duo of the most underrated indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the S&P 500 by a very impressive margin (see the details here).
We're going to take a glance at the new hedge fund action surrounding Myriad Genetics, Inc. (NASDAQ:MYGN).
How are hedge funds trading Myriad Genetics, Inc. (NASDAQ:MYGN)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in MYGN a year ago. With the smart money's capital changing hands, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Myriad Genetics, Inc. (NASDAQ:MYGN), which was worth $127.7 million at the end of the first quarter. On the second spot was Consonance Capital Management which amassed $109.9 million worth of shares. Moreover, Millennium Management, Point72 Asset Management, and SG Capital Management were also bullish on Myriad Genetics, Inc. (NASDAQ:MYGN), allocating a large percentage of their portfolios to this stock.
Due to the fact that Myriad Genetics, Inc. (NASDAQ:MYGN) has witnessed a decline in interest from the entirety of the hedge funds we track, it's easy to see that there were a few hedgies that decided to sell off their positions entirely in the third quarter. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP cut the largest position of the 700 funds monitored by Insider Monkey, totaling close to $9.8 million in stock, and Arthur B Cohen and Joseph Healey's Healthcor Management LP was right behind this move, as the fund dumped about $2.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks similar to Myriad Genetics, Inc. (NASDAQ:MYGN). These stocks are Rapid7 Inc (NASDAQ:RPD), South State Corporation (NASDAQ:SSB), First Interstate Bancsystem Inc (NASDAQ:FIBK), and Cadence Bancorporation (NYSE:CADE). This group of stocks' market valuations resemble MYGN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RPD,27,386668,3 SSB,13,25616,-1 FIBK,11,93579,-2 CADE,22,145431,4 Average,18.25,162824,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $344 million in MYGN's case. Rapid7 Inc (NASDAQ:RPD) is the most popular stock in this table. On the other hand First Interstate Bancsystem Inc (NASDAQ:FIBK) is the least popular one with only 11 bullish hedge fund positions. Myriad Genetics, Inc. (NASDAQ:MYGN) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately MYGN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MYGN investors were disappointed as the stock returned -26.9% during the same time period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.