Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about MeiraGTx Holdings plc (NASDAQ:MGTX).
Is MGTX a good stock to buy now? MeiraGTx Holdings plc (NASDAQ:MGTX) investors should be aware of a decrease in hedge fund interest recently. MeiraGTx Holdings plc (NASDAQ:MGTX) was in 14 hedge funds' portfolios at the end of September. The all time high for this statistic is 21. Our calculations also showed that MGTX 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are many signals stock traders can use to grade publicly traded companies. Two of the best signals are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outperform the broader indices by a very impressive margin (see the details here).
Phill Gross Adage Capital Phillip Gross
Phillip Gross of Adage 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. Now we're going to take a look at the recent hedge fund action regarding MeiraGTx Holdings plc (NASDAQ:MGTX).
Do Hedge Funds Think MGTX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the second quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in MGTX a year ago. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Perceptive Advisors, managed by Joseph Edelman, holds the biggest position in MeiraGTx Holdings plc (NASDAQ:MGTX). Perceptive Advisors has a $85.2 million position in the stock, comprising 1.2% of its 13F portfolio. On Perceptive Advisors's heels is OrbiMed Advisors, managed by Samuel Isaly, which holds a $49.2 million position; 0.6% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism encompass Ari Zweiman's 683 Capital Partners, Anand Parekh's Alyeska Investment Group and Phill Gross and Robert Atchinson's Adage Capital Management. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to MeiraGTx Holdings plc (NASDAQ:MGTX), around 2.46% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, setting aside 1.24 percent of its 13F equity portfolio to MGTX.
Judging by the fact that MeiraGTx Holdings plc (NASDAQ:MGTX) has faced falling interest from the smart money, it's safe to say that there were a few hedgies that elected to cut their full holdings last quarter. Intriguingly, Renaissance Technologies dropped the biggest investment of the 750 funds tracked by Insider Monkey, valued at close to $0.7 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also sold off its stock, about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's go over hedge fund activity in other stocks similar to MeiraGTx Holdings plc (NASDAQ:MGTX). We will take a look at ProSight Global, Inc. (NYSE:PROS), Enova International Inc (NYSE:ENVA), Clean Energy Fuels Corp (NASDAQ:CLNE), CEL-SCI Corporation (NYSE:CVM), ADTRAN, Inc. (NASDAQ:ADTN), Hawkins, Inc. (NASDAQ:HWKN), and Invesco Mortgage Capital Inc (NYSE:IVR). This group of stocks' market valuations match MGTX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PROS,11,10199,7 ENVA,23,118896,2 CLNE,11,16640,0 CVM,5,13243,-1 ADTN,13,63994,-4 HWKN,11,17961,2 IVR,9,13722,-3 Average,11.9,36379,0.4 [/table]
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $175 million in MGTX's case. Enova International Inc (NYSE:ENVA) is the most popular stock in this table. On the other hand CEL-SCI Corporation (NYSE:CVM) is the least popular one with only 5 bullish hedge fund positions. MeiraGTx Holdings plc (NASDAQ:MGTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MGTX is 46. 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 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 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately MGTX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MGTX were disappointed as the stock returned -0.6% since the end of September (through 12/8) 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 this year.
Get real-time email alerts: Follow Meiragtx Holdings Plc (NASDAQ:MGTX)
Disclosure: None. This article was originally published at Insider Monkey.
