The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Adaptimmune Therapeutics plc (NASDAQ:ADAP) and determine whether the smart money was really smart about this stock.
Adaptimmune Therapeutics plc (NASDAQ:ADAP) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 16. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ADAP investors should pay attention to an increase in hedge fund sentiment recently. There were 11 hedge funds in our database with ADAP holdings at the end of March. Our calculations also showed that ADAP isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
To most market participants, hedge funds are viewed as slow, outdated investment tools of the past. While there are more than 8000 funds with their doors open at present, We choose to focus on the upper echelon of this club, approximately 850 funds. Most estimates calculate that this group of people control the majority of the smart money’s total capital, and by keeping track of their finest equity investments, Insider Monkey has brought to light various investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Felix Baker of Baker Bros.
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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind let’s take a look at the fresh hedge fund action surrounding Adaptimmune Therapeutics plc (NASDAQ:ADAP).
What does smart money think about Adaptimmune Therapeutics plc (NASDAQ:ADAP)?
At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 73% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in ADAP a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Matrix Capital Management, managed by David Goel and Paul Ferri, holds the largest position in Adaptimmune Therapeutics plc (NASDAQ:ADAP). Matrix Capital Management has a $390.1 million position in the stock, comprising 6.1% of its 13F portfolio. The second most bullish fund manager is RA Capital Management, led by Peter Kolchinsky, holding a $130.7 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism contain Behzad Aghazadeh’s Avoro Capital Advisors (venBio Select Advisor), Julian Baker and Felix Baker’s Baker Bros. Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Matrix Capital Management allocated the biggest weight to Adaptimmune Therapeutics plc (NASDAQ:ADAP), around 6.08% of its 13F portfolio. Acuta Capital Partners is also relatively very bullish on the stock, setting aside 3.37 percent of its 13F equity portfolio to ADAP.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, established the largest position in Adaptimmune Therapeutics plc (NASDAQ:ADAP). Avoro Capital Advisors (venBio Select Advisor) had $100.1 million invested in the company at the end of the quarter. Farallon Capital also made a $25 million investment in the stock during the quarter. The other funds with new positions in the stock are Manfred Yu’s Acuta Capital Partners, Joseph Edelman’s Perceptive Advisors, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks similar to Adaptimmune Therapeutics plc (NASDAQ:ADAP). We will take a look at NIC Inc. (NASDAQ:EGOV), Holly Energy Partners, L.P. (NYSE:HEP), Magnolia Oil & Gas Corporation (NYSE:MGY), First Midwest Bancorp Inc (NASDAQ:FMBI), Arconic Corporation (NYSE:ARNC), Inter Parfums, Inc. (NASDAQ:IPAR), and Horace Mann Educators Corporation (NYSE:HMN). All of these stocks’ market caps are similar to ADAP’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EGOV,16,108964,-1 HEP,2,2399,-4 MGY,20,86261,0 FMBI,11,39364,0 ARNC,16,478899,-9 IPAR,15,62131,2 HMN,6,15420,-5 Average,12.3,113348,-2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $831 million in ADAP’s case. Magnolia Oil & Gas Corporation (NYSE:MGY) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 2 bullish hedge fund positions. Adaptimmune Therapeutics plc (NASDAQ:ADAP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ADAP is 87.2. 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 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 gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately ADAP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ADAP were disappointed as the stock returned -20.3% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.