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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Innoviva, Inc. (NASDAQ:INVA).
Is INVA a good stock to buy now? The best stock pickers were turning bullish. The number of long hedge fund bets improved by 2 recently. Innoviva, Inc. (NASDAQ:INVA) was in 21 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that INVA isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
At the moment there are a lot of formulas investors put to use to evaluate stocks. A pair of the less utilized formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform their index-focused peers by a solid amount (see the details here).
Alex Denner of Sarissa Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind let's review the latest hedge fund action regarding Innoviva, Inc. (NASDAQ:INVA).
Do Hedge Funds Think INVA Is A Good Stock To Buy Now?
At Q3's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INVA over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Innoviva, Inc. (NASDAQ:INVA), with a stake worth $87.7 million reported as of the end of September. Trailing Renaissance Technologies was Sarissa Capital Management, which amassed a stake valued at $67 million. GLG Partners, Arrowstreet Capital, and D E Shaw 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 Sarissa Capital Management allocated the biggest weight to Innoviva, Inc. (NASDAQ:INVA), around 7.89% of its 13F portfolio. 13D Management is also relatively very bullish on the stock, earmarking 1.58 percent of its 13F equity portfolio to INVA.
Consequently, some big names were leading the bulls' herd. Antara Capital, managed by Himanshu Gulati, assembled the most valuable position in Innoviva, Inc. (NASDAQ:INVA). Antara Capital had $5.3 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Peter Muller's PDT Partners, Michael Gelband's ExodusPoint Capital, and Greg Eisner's Engineers Gate Manager.
Let's now take a look at hedge fund activity in other stocks similar to Innoviva, Inc. (NASDAQ:INVA). We will take a look at Lakeland Financial Corporation (NASDAQ:LKFN), Materion Corp (NYSE:MTRN), EverQuote, Inc. (NASDAQ:EVER), Avidity Biosciences, Inc. (NASDAQ:RNA), Genetron Holdings Limited (NASDAQ:GTH), NANO-X IMAGING LTD (NASDAQ:NNOX), and Lindsay Corporation (NYSE:LNN). All of these stocks' market caps match INVA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LKFN,5,9688,0 MTRN,14,81395,0 EVER,21,178745,-2 RNA,17,311619,-7 GTH,12,99741,-4 NNOX,6,23654,6 LNN,16,161024,5 Average,13,123695,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $231 million in INVA's case. EverQuote, Inc. (NASDAQ:EVER) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 5 bullish hedge fund positions. Innoviva, Inc. (NASDAQ:INVA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INVA is 82.2. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on INVA, though not to the same extent, as the stock returned 8.9% since Q3 (through December 14th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.