With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was VolitionRX Limited (NYSE:VNRX).
Is VolitionRX Limited (NYSE:VNRX) a buy, sell, or hold? Hedge funds were taking a bullish view. The number of bullish hedge fund positions improved by 4 lately. VolitionRX Limited (NYSE:VNRX) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 4. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VNRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Millennium Management, Catapult Capital Management
Israel Englander of Millennium 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 $23 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. Now we're going to check out the latest hedge fund action encompassing VolitionRX Limited (NYSE:VNRX).
Do Hedge Funds Think VNRX Is A Good Stock To Buy Now?
At Q1's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 400% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in VNRX over the last 23 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Is VNRX A Good Stock To Buy?
The largest stake in VolitionRX Limited (NYSE:VNRX) was held by Engineers Gate Manager, which reported holding $0.2 million worth of stock at the end of December. It was followed by Paloma Partners with a $0.1 million position. Other investors bullish on the company included Renaissance Technologies, Millennium Management, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to VolitionRX Limited (NYSE:VNRX), around 0.01% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, setting aside 0.0027 percent of its 13F equity portfolio to VNRX.
As one would reasonably expect, some big names were breaking ground themselves. Engineers Gate Manager, managed by Greg Eisner, created the most valuable position in VolitionRX Limited (NYSE:VNRX). Engineers Gate Manager had $0.2 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also initiated a $0.1 million position during the quarter. The following funds were also among the new VNRX investors: Renaissance Technologies, Israel Englander's Millennium Management, and Anand Parekh's Alyeska Investment Group.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as VolitionRX Limited (NYSE:VNRX) but similarly valued. We will take a look at Pacific Mercantile Bancorp (NASDAQ:PMBC), Adamas Pharmaceuticals Inc (NASDAQ:ADMS), HyreCar Inc. (NASDAQ:HYRE), First Western Financial, Inc. (NASDAQ:MYFW), EMCORE Corporation (NASDAQ:EMKR), Oncolytics Biotech, Inc. (NASDAQ:ONCY), and Natural Resource Partners LP (NYSE:NRP). This group of stocks' market caps are similar to VNRX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PMBC,7,32539,3 ADMS,18,66719,5 HYRE,16,52504,2 MYFW,3,10421,0 EMKR,19,62826,4 ONCY,2,542,-1 NRP,1,9040,0 Average,9.4,33513,1.9 [/table]
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $1 million in VNRX's case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand Natural Resource Partners LP (NYSE:NRP) is the least popular one with only 1 bullish hedge fund positions. VolitionRX Limited (NYSE:VNRX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for VNRX is 50.1. 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately VNRX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); VNRX investors were disappointed as the stock returned -14.6% since the end of March (through 6/18) 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.
