The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded MacroGenics Inc (NASDAQ:MGNX) based on those filings.
MacroGenics Inc (NASDAQ:MGNX) was in 16 hedge funds' portfolios at the end of the first quarter of 2020. MGNX investors should be aware of a decrease in hedge fund interest of late. There were 17 hedge funds in our database with MGNX holdings at the end of the previous quarter. Our calculations also showed that MGNX isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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 S&P 500 ETFs by 58 percentage points since March 2017 (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_845793" align="aligncenter" width="395"] Peter Rathjens of Arrowstreet Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the new hedge fund action encompassing MacroGenics Inc (NASDAQ:MGNX).
How are hedge funds trading MacroGenics Inc (NASDAQ:MGNX)?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MGNX over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Israel Englander's Millennium Management has the largest position in MacroGenics Inc (NASDAQ:MGNX), worth close to $9.5 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Henrik Rhenman of Rhenman & Partners Asset Management, with a $5.8 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Renaissance Technologies, James A. Silverman's Opaleye Management and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Rhenman & Partners Asset Management allocated the biggest weight to MacroGenics Inc (NASDAQ:MGNX), around 0.82% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, setting aside 0.65 percent of its 13F equity portfolio to MGNX.
Judging by the fact that MacroGenics Inc (NASDAQ:MGNX) has witnessed falling interest from hedge fund managers, logic holds that there were a few money managers that decided to sell off their full holdings in the first quarter. Intriguingly, Thomas E. Claugus's GMT Capital sold off the largest stake of the 750 funds followed by Insider Monkey, totaling about $3.6 million in stock, and Minhua Zhang's Weld Capital Management was right behind this move, as the fund dumped about $0.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds in the first quarter.
Let's go over hedge fund activity in other stocks similar to MacroGenics Inc (NASDAQ:MGNX). These stocks are UFP Technologies, Inc. (NASDAQ:UFPT), Independent Bank Corporation (NASDAQ:IBCP), Urovant Sciences Ltd. (NASDAQ:UROV), and Bridgewater Bancshares, Inc. (NASDAQ:BWB). This group of stocks' market values match MGNX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UFPT,9,42454,-1 IBCP,12,26713,-1 UROV,7,48346,-6 BWB,8,18192,-2 Average,9,33926,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $34 million in MGNX's case. Independent Bank Corporation (NASDAQ:IBCP) is the most popular stock in this table. On the other hand Urovant Sciences Ltd. (NASDAQ:UROV) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks MacroGenics Inc (NASDAQ:MGNX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on MGNX as the stock returned 400.3% so far in Q2 (through June 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.