Hedge Funds Are Selling Ionis Pharmaceuticals, Inc. (IONS)
Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) changed recently.
Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) was in 23 hedge funds' portfolios at the end of March. The all time high for this statistic is 28. IONS investors should be aware of a decrease in support from the world's most elite money managers recently. There were 28 hedge funds in our database with IONS positions at the end of the fourth quarter. Our calculations also showed that IONS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Henrik Rhenman of Rhenman & Partners Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. With all of this in mind we're going to take a look at the fresh hedge fund action encompassing Ionis Pharmaceuticals, Inc. (NASDAQ:IONS).
Do Hedge Funds Think IONS Is A Good Stock To Buy Now?
At the end of March, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IONS over the last 23 quarters. 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, Catherine D. Wood's ARK Investment Management has the most valuable position in Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), worth close to $231.2 million, corresponding to 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, which holds a $61.3 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Stephen DuBois's Camber Capital Management, John Overdeck and David Siegel's Two Sigma Advisors and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Biotechnology Value Fund / BVF Inc allocated the biggest weight to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), around 2.3% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, setting aside 1.54 percent of its 13F equity portfolio to IONS.
Seeing as Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of money managers that elected to cut their positions entirely heading into Q2. Interestingly, Steve Cohen's Point72 Asset Management said goodbye to the largest position of the 750 funds followed by Insider Monkey, worth close to $22.8 million in stock, and Christopher James's Partner Fund Management was right behind this move, as the fund said goodbye to about $14.9 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds heading into Q2.
Let's check out hedge fund activity in other stocks similar to Ionis Pharmaceuticals, Inc. (NASDAQ:IONS). We will take a look at Elbit Systems Ltd. (NASDAQ:ESLT), Pan American Silver Corp. (NASDAQ:PAAS), YETI Holdings, Inc. (NYSE:YETI), BlackLine, Inc. (NASDAQ:BL), Terminix Global Holdings, Inc. (NYSE:TMX), Sana Biotechnology, Inc. (NASDAQ:SANA), and BWX Technologies Inc (NYSE:BWXT). All of these stocks' market caps match IONS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ESLT,3,50211,-2 PAAS,27,352324,0 YETI,30,159366,11 BL,24,271832,1 TMX,27,456007,-3 SANA,15,158923,15 BWXT,16,154661,-3 Average,20.3,229046,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $541 million in IONS's case. YETI Holdings, Inc. (NYSE:YETI) is the most popular stock in this table. On the other hand Elbit Systems Ltd. (NASDAQ:ESLT) is the least popular one with only 3 bullish hedge fund positions. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IONS is 61.7. 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 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately IONS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on IONS were disappointed as the stock returned -18.7% since the end of March (through 7/16) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
