It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 5.7% in the 12 months ending October 26 (including dividend payments). Conversely, hedge funds’ 30 preferred S&P 500 stocks (as of June 2018) generated a return of 15.1% during the same 12-month period, with 53% of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX).
BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) investors should pay attention to an increase in support from the world’s most elite money managers lately. Our calculations also showed that BCRX isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s review the fresh hedge fund action regarding BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX).
What have hedge funds been doing with BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)?
Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in BCRX at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Among these funds, Baker Bros. Advisors held the most valuable stake in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), which was worth $115.2 million at the end of the third quarter. On the second spot was RA Capital Management which amassed $70.5 million worth of shares. Moreover, Great Point Partners, Deerfield Management, and D E Shaw were also bullish on BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers have jumped into BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) headfirst. Ghost Tree Capital, managed by Ken Greenberg and David Kim, assembled the most valuable position in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). Ghost Tree Capital had $3.8 million invested in the company at the end of the quarter. Efrem Kamen’s Pura Vida Investments also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Mike Vranos’s Ellington, Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) but similarly valued. These stocks are Connecticut Water Service, Inc. (NASDAQ:CTWS), CytomX Therapeutics, Inc. (NASDAQ:CTMX), Forrester Research, Inc. (NASDAQ:FORR), and Harmony Gold Mining Company Limited (NYSE:HMY). All of these stocks’ market caps are similar to BCRX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTWS | 6 | 26624 | -2 |
| CTMX | 19 | 144953 | 0 |
| FORR | 9 | 52008 | 0 |
| HMY | 7 | 8354 | -1 |
| Average | 10.25 | 57985 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $345 million in BCRX’s case. CytomX Therapeutics, Inc. (NASDAQ:CTMX) is the most popular stock in this table. On the other hand Connecticut Water Service, Inc. (NASDAQ:CTWS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
