There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX).
Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) was in 14 hedge funds' portfolios at the end of March. PGNX has seen an increase in hedge fund sentiment in recent months. There were 13 hedge funds in our database with PGNX holdings at the end of the previous quarter. Our calculations also showed that PGNX isn't among the 30 most popular stocks among hedge funds.
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.
We're going to review the new hedge fund action surrounding Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX).
Hedge fund activity in Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX)
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PGNX over the last 15 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Point72 Asset Management was the largest shareholder of Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), with a stake worth $26.9 million reported as of the end of March. Trailing Point72 Asset Management was Farallon Capital, which amassed a stake valued at $19.5 million. Ardsley Partners, Royce & Associates, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. PDT Partners, managed by Peter Muller, assembled the largest position in Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX). PDT Partners had $0.7 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) but similarly valued. These stocks are Golden Entertainment Inc (NASDAQ:GDEN), Gores Metropoulos, Inc. (NASDAQ:GMHI), Bank First National Corporation (NASDAQ:BFC), and Albireo Pharma, Inc. (NASDAQ:ALBO). This group of stocks' market valuations match PGNX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GDEN,12,87918,0 GMHI,18,172284,18 BFC,4,4587,4 ALBO,13,95457,1 Average,11.75,90062,5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $68 million in PGNX's case. Gores Metropoulos, Inc. (NASDAQ:GMHI) is the most popular stock in this table. On the other hand Bank First National Corporation (NASDAQ:BFC) is the least popular one with only 4 bullish hedge fund positions. Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on PGNX, though not to the same extent, as the stock returned 5.2% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.