AnaptysBio, Inc. (ANAB): Hedge Funds Are Snapping Up

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards AnaptysBio, Inc. (NASDAQ:ANAB).

Is AnaptysBio, Inc. (NASDAQ:ANAB) the right pick for your portfolio? Hedge funds were getting more bullish. The number of bullish hedge fund positions went up by 2 recently. AnaptysBio, Inc. (NASDAQ:ANAB) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that ANAB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most investors, hedge funds are seen as slow, outdated financial vehicles of the past. While there are over 8000 funds trading today, Our researchers hone in on the upper echelon of this group, about 850 funds. These investment experts watch over the majority of all hedge funds’ total capital, and by observing their highest performing picks, Insider Monkey has found a few investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Oleg Nodelman of EcoR1 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy 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 let’s take a look at the recent hedge fund action encompassing AnaptysBio, Inc. (NASDAQ:ANAB).

Do Hedge Funds Think ANAB Is A Good Stock To Buy Now?

At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in ANAB a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

More specifically, EcoR1 Capital was the largest shareholder of AnaptysBio, Inc. (NASDAQ:ANAB), with a stake worth $195 million reported as of the end of June. Trailing EcoR1 Capital was Tang Capital Management, which amassed a stake valued at $68.2 million. Frazier Healthcare Partners, Biotechnology Value Fund / BVF Inc, and Woodline Partners 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 Tang Capital Management allocated the biggest weight to AnaptysBio, Inc. (NASDAQ:ANAB), around 13.57% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, setting aside 7.29 percent of its 13F equity portfolio to ANAB.

Now, key hedge funds were breaking ground themselves. Great Point Partners, managed by Jeffrey Jay and David Kroin, assembled the biggest position in AnaptysBio, Inc. (NASDAQ:ANAB). Great Point Partners had $10.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2.8 million position during the quarter. The other funds with brand new ANAB positions are Michael Gelband’s ExodusPoint Capital, Paul Tudor Jones’s Tudor Investment Corp, and Greg Eisner’s Engineers Gate Manager.

Let’s now take a look at hedge fund activity in other stocks similar to AnaptysBio, Inc. (NASDAQ:ANAB). We will take a look at CrossFirst Bankshares, Inc. (NASDAQ:CFB), Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX), CURO Group Holdings Corp. (NYSE:CURO), Tutor Perini Corp (NYSE:TPC), Praxis Precision Medicines, Inc. (NASDAQ:PRAX), Allot Ltd. (NASDAQ:ALLT), and Gladstone Land Corporation (NASDAQ:LAND). This group of stocks’ market valuations match ANAB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $403 million in ANAB’s case. Praxis Precision Medicines, Inc. (NASDAQ:PRAX) is the most popular stock in this table. On the other hand Gladstone Land Corporation (NASDAQ:LAND) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks AnaptysBio, Inc. (NASDAQ:ANAB) is more popular among hedge funds. Our overall hedge fund sentiment score for ANAB is 79.2. 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. 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 returned 24% in 2021 through October 22nd but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on ANAB as the stock returned 10.1% since the end of June (through 10/22) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.

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