After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Jounce Therapeutics, Inc. (NASDAQ:JNCE).
Jounce Therapeutics, Inc. (NASDAQ:JNCE) has seen an increase in support from the world's most elite money managers in recent months. JNCE was in 10 hedge funds' portfolios at the end of the first quarter of 2019. There were 8 hedge funds in our database with JNCE holdings at the end of the previous quarter. Our calculations also showed that JNCE isn't among the 30 most popular stocks among hedge funds.
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. 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.
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman, GLG Partners[/caption]
Let's analyze the fresh hedge fund action regarding Jounce Therapeutics, Inc. (NASDAQ:JNCE).
What have hedge funds been doing with Jounce Therapeutics, Inc. (NASDAQ:JNCE)?
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in JNCE over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Jounce Therapeutics, Inc. (NASDAQ:JNCE), which was worth $2.4 million at the end of the first quarter. On the second spot was Redmile Group which amassed $1.6 million worth of shares. Moreover, Two Sigma Advisors, D E Shaw, and Citadel Investment Group were also bullish on Jounce Therapeutics, Inc. (NASDAQ:JNCE), allocating a large percentage of their portfolios to this stock.
Now, specific money managers have jumped into Jounce Therapeutics, Inc. (NASDAQ:JNCE) headfirst. PDT Partners, managed by Peter Muller, assembled the most valuable position in Jounce Therapeutics, Inc. (NASDAQ:JNCE). PDT Partners had $0.3 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 other funds with new positions in the stock are Thomas Bailard's Bailard Inc and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Jounce Therapeutics, Inc. (NASDAQ:JNCE) but similarly valued. These stocks are Ardmore Shipping Corp (NYSE:ASC), Lifevantage Corporation (NASDAQ:LFVN), Foamix Pharmaceuticals Ltd (NASDAQ:FOMX), and Unity Bancorp, Inc. (NASDAQ:UNTY). This group of stocks' market valuations are similar to JNCE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASC,9,20991,-1 LFVN,11,23500,0 FOMX,15,66772,0 UNTY,4,29798,0 Average,9.75,35265,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $7 million in JNCE's case. Foamix Pharmaceuticals Ltd (NASDAQ:FOMX) is the most popular stock in this table. On the other hand Unity Bancorp, Inc. (NASDAQ:UNTY) is the least popular one with only 4 bullish hedge fund positions. Jounce Therapeutics, Inc. (NASDAQ:JNCE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 JNCE wasn't nearly as popular as these 20 stocks and hedge funds that were betting on JNCE were disappointed as the stock returned -21.6% during the same 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.