Did Hedge Funds Catch A Break With Intellia Therapeutics, Inc. (NTLA)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Intellia Therapeutics, Inc. (NASDAQ:NTLA) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

Intellia Therapeutics, Inc. (NASDAQ:NTLA) was in 37 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. NTLA investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 41 hedge funds in our database with NTLA holdings at the end of June. Our calculations also showed that NTLA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a peek at the fresh hedge fund action surrounding Intellia Therapeutics, Inc. (NASDAQ:NTLA).

William Harnisch of Peconic Partners LLC

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

At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in NTLA a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

More specifically, ARK Investment Management was the largest shareholder of Intellia Therapeutics, Inc. (NASDAQ:NTLA), with a stake worth $904.6 million reported as of the end of September. Trailing ARK Investment Management was Viking Global, which amassed a stake valued at $171.6 million. Darwin Global Management, Adage Capital Management, and Driehaus Capital 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 Darwin Global Management allocated the biggest weight to Intellia Therapeutics, Inc. (NASDAQ:NTLA), around 18.57% of its 13F portfolio. Himension Capital is also relatively very bullish on the stock, earmarking 4.4 percent of its 13F equity portfolio to NTLA.

Because Intellia Therapeutics, Inc. (NASDAQ:NTLA) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of hedgies who were dropping their full holdings heading into Q4. Intriguingly, Neil Shahrestani’s Ikarian Capital dumped the biggest stake of the 750 funds monitored by Insider Monkey, valued at close to $47.7 million in call options. Jeffrey Jay and David Kroin’s fund, Great Point Partners, also said goodbye to its call options, about $16.2 million worth. These moves are important to note, as total hedge fund interest dropped by 4 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Intellia Therapeutics, Inc. (NASDAQ:NTLA). We will take a look at Levi Strauss & Co. (NYSE:LEVI), Chegg Inc (NYSE:CHGG), Hubbell Incorporated (NYSE:HUBB), Wynn Resorts, Limited (NASDAQ:WYNN), CubeSmart (NYSE:CUBE), Penumbra Inc (NYSE:PEN), and A. O. Smith Corporation (NYSE:AOS). All of these stocks’ market caps match NTLA’s market cap.

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 $420 million. That figure was $1620 million in NTLA’s case. Chegg Inc (NYSE:CHGG) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 18 bullish hedge fund positions. Intellia Therapeutics, Inc. (NASDAQ:NTLA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NTLA is 73.3. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, NTLA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NTLA were disappointed as the stock returned -29.5% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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