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 Seattle Genetics, Inc. (NASDAQ:SGEN).
Seattle Genetics, Inc. (NASDAQ:SGEN) investors should be aware of an increase in hedge fund interest of late. Our calculations also showed that sgen isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's view the recent hedge fund action encompassing Seattle Genetics, Inc. (NASDAQ:SGEN).
What have hedge funds been doing with Seattle Genetics, Inc. (NASDAQ:SGEN)?
At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in SGEN 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.
The largest stake in Seattle Genetics, Inc. (NASDAQ:SGEN) was held by Baker Bros. Advisors, which reported holding $3738.9 million worth of stock at the end of March. It was followed by Matrix Capital Management with a $230.1 million position. Other investors bullish on the company included Rock Springs Capital Management, Citadel Investment Group, and D E Shaw.
As industrywide interest jumped, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the largest position in Seattle Genetics, Inc. (NASDAQ:SGEN). Millennium Management had $3.4 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $2.7 million position during the quarter. The other funds with brand new SGEN positions are Israel Englander's Millennium Management, Mike Vranos's Ellington, and Dmitry Balyasny's Balyasny Asset Management.
Let's go over hedge fund activity in other stocks similar to Seattle Genetics, Inc. (NASDAQ:SGEN). We will take a look at Elanco Animal Health Incorporated (NYSE:ELAN), Old Dominion Freight Line, Inc. (NASDAQ:ODFL), Kansas City Southern (NYSE:KSU), and SVB Financial Group (NASDAQ:SIVB). All of these stocks' market caps match SGEN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ELAN,33,1055959,15 ODFL,26,220250,6 KSU,26,560883,6 SIVB,29,551951,-4 Average,28.5,597261,5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $597 million. That figure was $4016 million in SGEN's case. Elanco Animal Health Incorporated (NYSE:ELAN) is the most popular stock in this table. On the other hand Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Seattle Genetics, Inc. (NASDAQ:SGEN) is even less popular than ODFL. Hedge funds dodged a bullet by taking a bearish stance towards SGEN. Our calculations showed that the top 15 most popular hedge fund stocks returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately SGEN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SGEN investors were disappointed as the stock returned -7.7% during the same time frame 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 the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.