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Is SWTX A Good Stock To Buy Now?

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  • SWTX

At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) makes for a good investment right now.

Is SWTX a good stock to buy now? Investors who are in the know were becoming hopeful. The number of bullish hedge fund bets inched up by 1 recently. SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) was in 16 hedge funds' portfolios at the end of September. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SWTX 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). There were 15 hedge funds in our database with SWTX positions at the end of the second quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a lot of tools market participants use to size up stocks. A pair of the most useful tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the S&P 500 by a significant amount (see the details here).

Richard Driehaus of Driehaus Capital

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 we're going to take a look at the key hedge fund action regarding SpringWorks Therapeutics, Inc. (NASDAQ:SWTX).

Do Hedge Funds Think SWTX Is A Good Stock To Buy Now?

At the end of September, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SWTX over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, OrbiMed Advisors was the largest shareholder of SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), with a stake worth $353.1 million reported as of the end of September. Trailing OrbiMed Advisors was Perceptive Advisors, which amassed a stake valued at $165.9 million. Biotechnology Value Fund / BVF Inc, Deerfield Management, and Driehaus Capital 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to SpringWorks Therapeutics, Inc. (NASDAQ:SWTX), around 5.33% of its 13F portfolio. Samsara BioCapital is also relatively very bullish on the stock, designating 5.29 percent of its 13F equity portfolio to SWTX.

As industrywide interest jumped, specific money managers have jumped into SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) headfirst. Consonance Capital Management, managed by Mitchell Blutt, established the most outsized position in SpringWorks Therapeutics, Inc. (NASDAQ:SWTX). Consonance Capital Management had $28.7 million invested in the company at the end of the quarter. Renaissance Technologies also made a $0.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is Karim Abbadi and Edward McBride's Centiva Capital.

Let's check out hedge fund activity in other stocks similar to SpringWorks Therapeutics, Inc. (NASDAQ:SWTX). We will take a look at SciPlay Corporation (NASDAQ:SCPL), Outset Medical, Inc. (NASDAQ:OM), Sterling Bancorp (NYSE:STL), Graham Holdings Co (NYSE:GHC), Ingevity Corporation (NYSE:NGVT), PriceSmart, Inc. (NASDAQ:PSMT), and Urban Outfitters, Inc. (NASDAQ:URBN). This group of stocks' market values are similar to SWTX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCPL,27,128931,1 OM,27,586730,27 STL,25,210125,-2 GHC,24,309246,2 NGVT,28,203759,-3 PSMT,12,43056,0 URBN,22,142960,2 Average,23.6,232115,3.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $232 million. That figure was $848 million in SWTX's case. Ingevity Corporation (NYSE:NGVT) is the most popular stock in this table. On the other hand PriceSmart, Inc. (NASDAQ:PSMT) is the least popular one with only 12 bullish hedge fund positions. SpringWorks Therapeutics, Inc. (NASDAQ:SWTX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SWTX is 48.5. 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. A small number of hedge funds were also right about betting on SWTX as the stock returned 57.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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