A large number of 13F documents filed with the U.S. Securities and Exchange Commission have been processed by Insider Monkey so that individual investors can look at the overall sentiment of the hedge fund versus the stocks included in their watch lists. These newly submitted public documents disclose the positions of money managers by the end of the three-month period ending December 31st. So let’s continue the discussion of hedge fund sentiment about Novavax, Inc. (NASDAQ: NVAX). NVAX does not yet have COVID-19 approved vaccines, but is developing vaccines for children and teens. The COVID-19 adult-targeted vaccine has shown similar efficacy rates as the Pfizer and Moderna vaccines. Since NVAX trades at a fraction of MRNA’s valuation, we think it’s a better stock to buy than Moderna.
Is NVAX stock a buy? Novavax, Inc. (NASDAQ: NVAX) has seen an increase in hedge fund interest in recent months. Novavax, Inc. (NASDAQ: NVAX) was in 37 hedge fund portfolios at the end of December. The highest time for this statistic is 36. This means that the bullish number of hedge fund positions in this stock is currently at its highest point. Our calculations have also shown that NVAX is not one of the 30 most popular stocks among hedge funds (click for Q4 rankings).
So, why do we pay attention to the sentiment of the hedge fund before making investment decisions? Our research has shown that the small-cap capitalization of hedge funds has managed to beat the market by double digits annually between 1999 and 2016, but the margin of better performance has declined in recent years. Nevertheless, we were still able to identify in advance a select group of hedge funds that have outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see details here).
Peter Kolchinsky of RA Capital Management
At Insider Monkey, we leave no stone unturned when looking for the next great investment idea. The House, for example, passed an important bill criminalizing marijuana. So we look at it under the radar marijuana stock now immediately. We go through lists like the 10 best battery stock for sale to identify the next stock with 10x upside potential. Although we recommend positions in only a small fraction of the companies we analyze, we look at as many stocks as possible. We read investment letters from hedge funds and listen to stocks at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind, let’s take a look at the recent hedge fund action around Novavax, Inc. (NASDAQ: NVAX), analyzed.
Do Hedge Funds think NVAX is a good stock to buy right now?
In the first quarter of 2021, a total of 37 of the hedge funds tracked by Insider Monkey were strong on this stock, a 3% change from the previous quarter. On the other hand, a year ago there were a total of 3 hedge funds with a bullish position in NVAX. With the shift in capital changes from hedges, there are some notable hedge fund managers who have significantly increased their interests (or have already built up large positions).
The largest stake in Novavax, Inc. (NASDAQ: NVAX), was held by RA Capital Management, which owns $ 422.5 million at the end of December. This was followed by Perceptive Advisors with a ranking of $ 116.3 million. Other investors in the company were Citadel Investment Group, Rock Springs Capital Management and Discovery Capital Management. In terms of the portfolio weights assigned to each position, Discovery Capital Management has the largest weight given to Novavax, Inc. (NASDAQ: NVAX), about 6.79% of its 13F portfolio. RA Capital Management is also relatively very strong on the stock, citing 5.91 percent of its 13F equity portfolio to NVAX.
With a general bullishness among the heavyweights, the major hedge funds have fueled this bullishness. Deerfield Management, managed by James E. Flynn, holds the largest position in Novavax, Inc. (NASDAQ: NVAX), begin. At the end of the quarter, Deerfield Management invested $ 31.3 million in the company. Farallon Capital also made a $ 30.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Christopher James’s Partner Fund Management, Kenneth Tropin’s Graham Capital Management and Chris Rokos’s Rokos Capital Management.
Let’s look at the activity of hedge funds in other stocks – not necessarily in the same industry as Novavax, Inc. (NASDAQ: NVAX) but is also appreciated. We’re going to look at McAfee Corp. (NASDAQ: MCFE), Syneos Health, Inc. (NASDAQ: SYNH), First Horizon National Corporation (NYSE: FHN), Donaldson Company, Inc. (NYSE: DCI), Redfin Corporation (NASDAQ: RDFN), SiteOne Landscape Supply, Inc. (NYSE: SITE), and Royal Gold, Inc. (NASDAQ: RGLD). This group of shares’ market values correspond to NVAX’s market value.
[table] Ticker, number of HFs with positions, total value of HF positions (x1000), change in HF position MCFE, 20,257825,20 SYNH, 29,592871, -11 FHN, 30,403346,0 DCI, 26,311896, – 4 RDFN, 21,209673, -7 SITE, 17,72044, -11 RGLD, 26,284227, -4 Average, 24,1,304555, -2,4 [/table]
Check out the table here if you are experiencing formatting issues.
As you can see, these stocks had an average of 24.1 positive-position hedge funds, and the average amount invested in these stocks was $ 305 million. That was $ 1004 million in the case of NVAX. First Horizon National Corporation (NYSE: FHN) is the most popular stock in this table. On the other hand, SiteOne Landscape Supply, Inc. (NYSE: SITE) the least popular with only 17 bullish hedge fund positions. Compared to these shares, Novavax, Inc. (NASDAQ: NVAX) more popular among hedge funds. Our overall sentiment of the NVAX hedge fund is 86. Shares with a higher number of hedge fund positions relative to other stocks, as well as their historical range, receive a higher sentiment score. Our calculations showed that the top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020 and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7.9% in 2021 through April 1, but were still able to beat the market by 0.4 percentage points. Hedge funds also matched the bet on NVAX, as the stock has outperformed the market since the end of December (up to and including 4/1) 66.6% returns and with an even larger margin. Hedge funds clearly seemed to be accumulating these stocks relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published by Insider Monkey.
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