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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 June. 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 argenx SE (NASDAQ:ARGX), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
argenx SE (NASDAQ:ARGX) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds' portfolios at the end of June. Our calculations also showed that ARGX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Liberty Global plc (NASDAQ:LBTYA), and News Corp (NASDAQ:NWSA) to gather more data points.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 we're going to analyze the key hedge fund action regarding argenx SE (NASDAQ:ARGX).
Do Hedge Funds Think ARGX Is A Good Stock To Buy Now?
At the end of June, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in ARGX a year ago. So, let's review 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, Julian Baker and Felix Baker's Baker Bros. Advisors has the largest position in argenx SE (NASDAQ:ARGX), worth close to $337.1 million, accounting for 1.5% of its total 13F portfolio. The second most bullish fund manager is Avoro Capital Advisors (venBio Select Advisor), led by Behzad Aghazadeh, holding a $285 million position; 5% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism contain Jeremy Green's Redmile Group, Mark Lampert's Biotechnology Value Fund / BVF Inc and Lei Zhang's Hillhouse Capital Management. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to argenx SE (NASDAQ:ARGX), around 7.35% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, setting aside 4.96 percent of its 13F equity portfolio to ARGX.
Due to the fact that argenx SE (NASDAQ:ARGX) has faced bearish sentiment from the smart money, logic holds that there lies a certain "tier" of money managers that slashed their full holdings heading into Q3. Intriguingly, Lone Pine Capital dumped the biggest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $150.4 million in stock, and Kamran Moghtaderi's Eversept Partners was right behind this move, as the fund sold off about $9.9 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as argenx SE (NASDAQ:ARGX) but similarly valued. We will take a look at BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Liberty Global plc (NASDAQ:LBTYA), News Corp (NASDAQ:NWSA), James Hardie Industries plc (NYSE:JHX), GameStop Corp. (NYSE:GME), Lumen Technologies, Inc. (NYSE:LUMN), and Brown & Brown, Inc. (NYSE:BRO). This group of stocks' market caps are closest to ARGX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMRN,44,1324516,1 LBTYA,30,806409,-5 NWSA,37,1087728,2 JHX,4,13518,0 GME,18,247901,5 LUMN,33,1056239,1 BRO,26,1212549,1 Average,27.4,821266,0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $821 million. That figure was $1454 million in ARGX's case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. argenx SE (NASDAQ:ARGX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ARGX is 57.6. 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 negative signal and 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 24.9% in 2021 through October 15th and surpassed the market again by 4.5 percentage points. Unfortunately ARGX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ARGX investors were disappointed as the stock returned -2.4% since the end of June (through 10/15) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.