BioAtla, Inc. (BCAB) Fell Out Of Favor With Hedge Funds

Is BioAtla, Inc. (NASDAQ:BCAB) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

BioAtla, Inc. (NASDAQ:BCAB) has experienced a decrease in hedge fund sentiment of late. BioAtla, Inc. (NASDAQ:BCAB) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 16. There were 13 hedge funds in our database with BCAB holdings at the end of March. Our calculations also showed that BCAB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the eyes of most stock holders, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are over 8000 funds trading at the moment, Our researchers hone in on the elite of this club, approximately 850 funds. These investment experts oversee bulk of all hedge funds’ total capital, and by paying attention to their best picks, Insider Monkey has unearthed several investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually 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.

Felix Baker of Baker Bros.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks 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. Keeping this in mind let’s review the recent hedge fund action encompassing BioAtla, Inc. (NASDAQ:BCAB).

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

At the end of June, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BCAB over the last 24 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Soleus Capital held the most valuable stake in BioAtla, Inc. (NASDAQ:BCAB), which was worth $118.4 million at the end of the second quarter. On the second spot was Cormorant Asset Management which amassed $82.7 million worth of shares. Farallon Capital, Baker Bros. Advisors, and Perceptive 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 Soleus Capital allocated the biggest weight to BioAtla, Inc. (NASDAQ:BCAB), around 18.21% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, earmarking 2.81 percent of its 13F equity portfolio to BCAB.

Judging by the fact that BioAtla, Inc. (NASDAQ:BCAB) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of fund managers who were dropping their positions entirely last quarter. At the top of the heap, Frank Fu’s CaaS Capital sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $3.6 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $1.4 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BioAtla, Inc. (NASDAQ:BCAB) but similarly valued. We will take a look at Genesis Energy, L.P. (NYSE:GEL), Sculptor Capital Management, Inc. (NYSE:SCU), Cytokinetics, Inc. (NASDAQ:CYTK), Franchise Group, Inc. (NASDAQ:FRG), Uniqure NV (NASDAQ:QURE), Kosmos Energy Ltd (NYSE:KOS), and FARO Technologies, Inc. (NASDAQ:FARO). All of these stocks’ market caps match BCAB’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $327 million in BCAB’s case. Cytokinetics, Inc. (NASDAQ:CYTK) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 5 bullish hedge fund positions. BioAtla, Inc. (NASDAQ:BCAB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BCAB is 30.4. 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 negative signal and 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately BCAB wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BCAB investors were disappointed as the stock returned -25% since the end of June (through 9/27) 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 most of these stocks already outperformed the market in 2021.

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