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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Regulus Therapeutics Inc (NASDAQ:RGLS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is RGLS a good stock to buy? Regulus Therapeutics Inc (NASDAQ:RGLS) has seen an increase in enthusiasm from smart money in recent months. Regulus Therapeutics Inc (NASDAQ:RGLS) was in 6 hedge funds' portfolios at the end of March. The all time high for this statistic is 14. Our calculations also showed that RGLS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most market participants, hedge funds are viewed as slow, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the top tier of this club, around 850 funds. Most estimates calculate that this group of people administer the lion's share of the hedge fund industry's total capital, and by keeping an eye on their best equity investments, Insider Monkey has formulated a few investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Alex Denner of Sarissa Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's review the recent hedge fund action encompassing Regulus Therapeutics Inc (NASDAQ:RGLS).
Do Hedge Funds Think RGLS Is A Good Stock To Buy Now?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards RGLS over the last 23 quarters. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Regulus Therapeutics Inc (NASDAQ:RGLS) was held by Point72 Asset Management, which reported holding $5 million worth of stock at the end of December. It was followed by Endurant Capital Management with a $3.7 million position. Other investors bullish on the company included Sarissa Capital Management, Ikarian Capital, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to Regulus Therapeutics Inc (NASDAQ:RGLS), around 0.97% of its 13F portfolio. Sarissa Capital Management is also relatively very bullish on the stock, designating 0.28 percent of its 13F equity portfolio to RGLS.
As industrywide interest jumped, key money managers have jumped into Regulus Therapeutics Inc (NASDAQ:RGLS) headfirst. Endurant Capital Management, managed by Vishal Saluja and Pham Quang, assembled the biggest position in Regulus Therapeutics Inc (NASDAQ:RGLS). Endurant Capital Management had $3.7 million invested in the company at the end of the quarter. Neil Shahrestani's Ikarian Capital also made a $1.9 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel's Two Sigma Advisors, Ken Griffin's Citadel Investment Group, and Ken Griffin's Citadel Investment Group.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Regulus Therapeutics Inc (NASDAQ:RGLS) but similarly valued. We will take a look at Beyond Air, Inc. (NASDAQ:XAIR), Evolution Petroleum Corporation (NYSE:EPM), Blue Apron Holdings, Inc. (NYSE:APRN), LEAP THERAPEUTICS, INC. (NASDAQ:LPTX), Broadwind Inc. (NASDAQ:BWEN), Evaxion Biotech A/S (NASDAQ:EVAX), and iSun, Inc. (NASDAQ:ISUN). This group of stocks' market valuations are closest to RGLS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XAIR,5,6015,1 EPM,9,10311,-1 APRN,9,3349,1 LPTX,10,28533,-2 BWEN,3,3781,-1 EVAX,3,2987,3 ISUN,1,140,1 Average,5.7,7874,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $15 million in RGLS's case. LEAP THERAPEUTICS, INC. (NASDAQ:LPTX) is the most popular stock in this table. On the other hand iSun, Inc. (NASDAQ:ISUN) is the least popular one with only 1 bullish hedge fund positions. Regulus Therapeutics Inc (NASDAQ:RGLS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RGLS is 47.6. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately RGLS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on RGLS were disappointed as the stock returned -41% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.