As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Acceleron Pharma Inc (NASDAQ:XLRN).
Is Acceleron Pharma Inc (NASDAQ:XLRN) a great investment today? Investors who are in the know were taking a pessimistic view. The number of bullish hedge fund positions were cut by 3 lately. Acceleron Pharma Inc (NASDAQ:XLRN) was in 31 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 48. Our calculations also showed that XLRN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 34 hedge funds in our database with XLRN positions at the end of the fourth quarter.
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Kamran Moghtaderi of Eversept Partners
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Do Hedge Funds Think XLRN Is A Good Stock To Buy Now?
At first quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards XLRN over the last 23 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Avoro Capital Advisors (venBio Select Advisor) was the largest shareholder of Acceleron Pharma Inc (NASDAQ:XLRN), with a stake worth $406.8 million reported as of the end of March. Trailing Avoro Capital Advisors (venBio Select Advisor) was Farallon Capital, which amassed a stake valued at $352.6 million. Alkeon Capital Management, Darwin Global Management, and Holocene Advisors 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 0 allocated the biggest weight to Acceleron Pharma Inc (NASDAQ:XLRN), around 39.97% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 12.94 percent of its 13F equity portfolio to XLRN.
Due to the fact that Acceleron Pharma Inc (NASDAQ:XLRN) has experienced declining sentiment from the smart money, it’s safe to say that there was a specific group of hedgies who were dropping their positions entirely by the end of the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $16.2 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund cut about $11.5 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 3 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 Acceleron Pharma Inc (NASDAQ:XLRN) but similarly valued. These stocks are Beyond Meat, Inc. (NASDAQ:BYND), Polaris Inc. (NYSE:PII), Ares Capital Corporation (NASDAQ:ARCC), CyrusOne Inc (NASDAQ:CONE), AerCap Holdings N.V. (NYSE:AER), First Citizens BancShares Inc. (NASDAQ:FCNCA), and Encompass Health Corporation (NYSE:EHC). This group of stocks’ market values are similar to XLRN’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BYND,26,338693,-1 PII,29,510308,-2 ARCC,15,84000,0 CONE,21,202453,0 AER,43,1675105,3 FCNCA,29,606668,2 EHC,36,836170,1 Average,28.4,607628,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.4 hedge funds with bullish positions and the average amount invested in these stocks was $608 million. That figure was $1647 million in XLRN’s case. AerCap Holdings N.V. (NYSE:AER) is the most popular stock in this table. On the other hand Ares Capital Corporation (NASDAQ:ARCC) is the least popular one with only 15 bullish hedge fund positions. Acceleron Pharma Inc (NASDAQ:XLRN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for XLRN is 49.9. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately XLRN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on XLRN were disappointed as the stock returned -6.8% since the end of March (through 7/2) 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.