Hedge Funds Are Selling PTC Therapeutics, Inc. (PTCT)
In this article we will take a look at whether hedge funds think PTC Therapeutics, Inc. (NASDAQ:PTCT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is PTC Therapeutics, Inc. (NASDAQ:PTCT) an excellent investment right now? The smart money is in a pessimistic mood. The number of bullish hedge fund bets retreated by 6 lately. Our calculations also showed that PTCT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). PTCT was in 28 hedge funds' portfolios at the end of March. There were 34 hedge funds in our database with PTCT holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are perceived as slow, outdated investment vehicles of the past. While there are greater than 8000 funds trading today, Our researchers choose to focus on the moguls of this club, about 850 funds. Most estimates calculate that this group of people preside over most of all hedge funds' total asset base, and by keeping track of their best stock picks, Insider Monkey has figured out a number of investment strategies that have historically outpaced the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_341400" align="aligncenter" width="400"]
Samuel Isaly of OrbiMed Advisors[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the recent hedge fund action surrounding PTC Therapeutics, Inc. (NASDAQ:PTCT).
What does smart money think about PTC Therapeutics, Inc. (NASDAQ:PTCT)?
At the end of the first quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the fourth quarter of 2019. By comparison, 31 hedge funds held shares or bullish call options in PTCT 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.
More specifically, Great Point Partners was the largest shareholder of PTC Therapeutics, Inc. (NASDAQ:PTCT), with a stake worth $78.7 million reported as of the end of September. Trailing Great Point Partners was Avoro Capital Advisors (venBio Select Advisor), which amassed a stake valued at $53.5 million. OrbiMed Advisors, D E Shaw, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Great Point Partners allocated the biggest weight to PTC Therapeutics, Inc. (NASDAQ:PTCT), around 8.22% of its 13F portfolio. Burrage Capital Management is also relatively very bullish on the stock, dishing out 8.03 percent of its 13F equity portfolio to PTCT.
Seeing as PTC Therapeutics, Inc. (NASDAQ:PTCT) has faced a decline in interest from hedge fund managers, we can see that there was a specific group of money managers that elected to cut their entire stakes by the end of the first quarter. Interestingly, Jeremy Green's Redmile Group dumped the biggest position of all the hedgies watched by Insider Monkey, valued at close to $41.3 million in stock. Farallon Capital, also sold off its stock, about $34.9 million worth. These moves are interesting, as total hedge fund interest fell by 6 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as PTC Therapeutics, Inc. (NASDAQ:PTCT) but similarly valued. We will take a look at Acacia Communications, Inc. (NASDAQ:ACIA), Omnicell, Inc. (NASDAQ:OMCL), El Paso Electric Company (NYSE:EE), and Rexnord Corp (NYSE:RXN). All of these stocks' market caps are closest to PTCT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ACIA,22,693548,-9 OMCL,17,54589,4 EE,23,398088,8 RXN,19,213250,-6 Average,20.25,339869,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $340 million. That figure was $378 million in PTCT's case. El Paso Electric Company (NYSE:EE) is the most popular stock in this table. On the other hand Omnicell, Inc. (NASDAQ:OMCL) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks PTC Therapeutics, Inc. (NASDAQ:PTCT) is more popular among hedge funds. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately PTCT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PTCT were disappointed as the stock returned 13.7% during the second quarter (through the end of May) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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