We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like MeiraGTx Holdings plc (NASDAQ:MGTX).
MeiraGTx Holdings plc (NASDAQ:MGTX) investors should pay attention to a decrease in activity from the world's largest hedge funds lately. MGTX was in 9 hedge funds' portfolios at the end of the second quarter of 2019. There were 11 hedge funds in our database with MGTX holdings at the end of the previous quarter. Our calculations also showed that MGTX isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a lot of formulas investors can use to analyze their stock investments. Two of the most underrated formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top fund managers can trounce their index-focused peers by a superb amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a peek at the new hedge fund action regarding MeiraGTx Holdings plc (NASDAQ:MGTX).
How are hedge funds trading MeiraGTx Holdings plc (NASDAQ:MGTX)?
At Q2's end, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in MGTX over the last 16 quarters. With hedgies' capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in MeiraGTx Holdings plc (NASDAQ:MGTX) was held by Perceptive Advisors, which reported holding $155.8 million worth of stock at the end of March. It was followed by OrbiMed Advisors with a $69.5 million position. Other investors bullish on the company included 683 Capital Partners, Sectoral Asset Management, and Adage Capital Management.
Since MeiraGTx Holdings plc (NASDAQ:MGTX) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there were a few hedge funds that decided to sell off their positions entirely by the end of the second quarter. Interestingly, James E. Flynn's Deerfield Management dumped the biggest stake of the "upper crust" of funds watched by Insider Monkey, valued at an estimated $4 million in stock. Lawrence Hawkins's fund, Prosight Capital, also sold off its stock, about $1.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds by the end of the second quarter.
Let's check out hedge fund activity in other stocks similar to MeiraGTx Holdings plc (NASDAQ:MGTX). We will take a look at Benchmark Electronics, Inc. (NYSE:BHE), Sturm, Ruger & Company, Inc. (NYSE:RGR), PetIQ, Inc. (NASDAQ:PETQ), and AMC Entertainment Holdings Inc (NYSE:AMC). All of these stocks' market caps are closest to MGTX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BHE,12,41025,-7 RGR,13,110819,-4 PETQ,13,86246,0 AMC,16,83024,-2 Average,13.5,80279,-3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $253 million in MGTX's case. AMC Entertainment Holdings Inc (NYSE:AMC) is the most popular stock in this table. On the other hand Benchmark Electronics, Inc. (NYSE:BHE) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks MeiraGTx Holdings plc (NASDAQ:MGTX) is even less popular than BHE. Hedge funds dodged a bullet by taking a bearish stance towards MGTX. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately MGTX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MGTX investors were disappointed as the stock returned -40.7% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.