At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Morphic Holding, Inc. (NASDAQ:MORF).
Morphic Holding, Inc. (NASDAQ:MORF) investors should pay attention to an increase in enthusiasm from smart money recently. Our calculations also showed that MORF 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are tons of signals investors put to use to grade their stock investments. Two of the less utilized signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top money managers can trounce their index-focused peers by a very impressive margin (see the details here).
[caption id="attachment_728973" align="aligncenter" width="396"] Oleg Nodelman of EcoR1 Capital[/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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 take a gander at the new hedge fund action encompassing Morphic Holding, Inc. (NASDAQ:MORF).
How are hedge funds trading Morphic Holding, Inc. (NASDAQ:MORF)?
At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 75% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MORF over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, EcoR1 Capital, managed by Oleg Nodelman, holds the number one position in Morphic Holding, Inc. (NASDAQ:MORF). EcoR1 Capital has a $41.4 million position in the stock, comprising 4.3% of its 13F portfolio. On EcoR1 Capital's heels is Joseph Edelman of Perceptive Advisors, with a $9.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Ken Griffin's Citadel Investment Group, Michael Castor's Sio Capital and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position EcoR1 Capital allocated the biggest weight to Morphic Holding, Inc. (NASDAQ:MORF), around 4.33% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to MORF.
Now, specific money managers have jumped into Morphic Holding, Inc. (NASDAQ:MORF) headfirst. Citadel Investment Group, managed by Ken Griffin, established the largest position in Morphic Holding, Inc. (NASDAQ:MORF). Citadel Investment Group had $0.7 million invested in the company at the end of the quarter. Michael Castor's Sio Capital also initiated a $0.7 million position during the quarter. The following funds were also among the new MORF investors: D. E. Shaw's D E Shaw and Israel Englander's Millennium Management.
Let's also examine hedge fund activity in other stocks similar to Morphic Holding, Inc. (NASDAQ:MORF). We will take a look at Zumiez Inc. (NASDAQ:ZUMZ), CBTX, Inc. (NASDAQ:CBTX), ChampionX Corporation (NYSE:APY), and Guess', Inc. (NYSE:GES). All of these stocks' market caps are closest to MORF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZUMZ,22,28267,-2 CBTX,10,7008,2 APY,19,49368,2 GES,16,31475,-4 Average,16.75,29030,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $54 million in MORF's case. Zumiez Inc. (NASDAQ:ZUMZ) is the most popular stock in this table. On the other hand CBTX, Inc. (NASDAQ:CBTX) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Morphic Holding, Inc. (NASDAQ:MORF) is even less popular than CBTX. Hedge funds clearly dropped the ball on MORF as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on MORF as the stock returned 56.9% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.