The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 28th, 2019. In this article we are going to take a look at smart money sentiment towards Arcus Biosciences, Inc. (NYSE:RCUS).
Arcus Biosciences, Inc. (NYSE:RCUS) was in 14 hedge funds’ portfolios at the end of the second quarter of 2019. RCUS shareholders have witnessed an increase in hedge fund sentiment of late. There were 8 hedge funds in our database with RCUS holdings at the end of the previous quarter. Our calculations also showed that RCUS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike other investors who track every movement of the 25 largest hedge funds, our long-short investment strategy relies on hedge fund buy/sell signals given by the 100 best performing hedge funds. We’re going to take a look at the new hedge fund action surrounding Arcus Biosciences, Inc. (NYSE:RCUS).
How are hedge funds trading Arcus Biosciences, Inc. (NYSE:RCUS)?
At the end of the second quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 75% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards RCUS over the last 16 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Among these funds, Biotechnology Value Fund / BVF Inc held the most valuable stake in Arcus Biosciences, Inc. (NYSE:RCUS), which was worth $28.1 million at the end of the second quarter. On the second spot was EcoR1 Capital which amassed $11.8 million worth of shares. Moreover, Foresite Capital, Hillhouse Capital Management, and Platinum Asset Management were also bullish on Arcus Biosciences, Inc. (NYSE:RCUS), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the largest position in Arcus Biosciences, Inc. (NYSE:RCUS). Millennium Management had $0.6 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.3 million position during the quarter. The other funds with brand new RCUS positions are Peter Muller’s PDT Partners, Parvinder Thiara’s Athanor Capital, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks similar to Arcus Biosciences, Inc. (NYSE:RCUS). These stocks are Purple Innovation, Inc. (NASDAQ:PRPL), Scorpio Bulkers Inc (NYSE:SALT), Spirit MTA REIT (NYSE:SMTA), and Health Insurance Innovations Inc (NASDAQ:HIIQ). This group of stocks’ market caps resemble RCUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRPL | 3 | 41911 | -1 |
| SALT | 10 | 18316 | 3 |
| SMTA | 19 | 112723 | -2 |
| HIIQ | 19 | 130570 | -3 |
| Average | 12.75 | 75880 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $58 million in RCUS’s case. Spirit MTA REIT (NYSE:SMTA) is the most popular stock in this table. On the other hand Purple Innovation, Inc. (NASDAQ:PRPL) is the least popular one with only 3 bullish hedge fund positions. Arcus Biosciences, Inc. (NYSE:RCUS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on RCUS as the stock returned 14.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
