Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Intellia Therapeutics, Inc. (NASDAQ:NTLA) from the perspective of those elite funds.
Is Intellia Therapeutics, Inc. (NASDAQ:NTLA) the right investment to pursue these days? Prominent investors are in a bearish mood. The number of bullish hedge fund bets fell by 1 lately. Our calculations also showed that NTLA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). NTLA was in 11 hedge funds’ portfolios at the end of the third quarter of 2019. There were 12 hedge funds in our database with NTLA positions at the end of the previous quarter.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the recent hedge fund action encompassing Intellia Therapeutics, Inc. (NASDAQ:NTLA).
How are hedge funds trading Intellia Therapeutics, Inc. (NASDAQ:NTLA)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in NTLA over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Intellia Therapeutics, Inc. (NASDAQ:NTLA) was held by OrbiMed Advisors, which reported holding $4.4 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $1.8 million position. Other investors bullish on the company included Baker Bros. Advisors, Citadel Investment Group, and Platinum Asset Management. In terms of the portfolio weights assigned to each position Opus Point Partners Management allocated the biggest weight to Intellia Therapeutics, Inc. (NASDAQ:NTLA), around 0.69% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to NTLA.
Judging by the fact that Intellia Therapeutics, Inc. (NASDAQ:NTLA) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedge funds that decided to sell off their entire stakes heading into Q4. Intriguingly, Renaissance Technologies said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $2.7 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $0.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Intellia Therapeutics, Inc. (NASDAQ:NTLA) but similarly valued. These stocks are Customers Bancorp Inc (NYSE:CUBI), National CineMedia, Inc. (NASDAQ:NCMI), Dorchester Minerals LP (NASDAQ:DMLP), and Valhi, Inc. (NYSE:VHI). This group of stocks’ market caps resemble NTLA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CUBI | 12 | 47860 | 0 |
| NCMI | 17 | 52383 | 1 |
| DMLP | 7 | 40449 | 0 |
| VHI | 6 | 4788 | 0 |
| Average | 10.5 | 36370 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $36 million. That figure was $13 million in NTLA’s case. National CineMedia, Inc. (NASDAQ:NCMI) is the most popular stock in this table. On the other hand Valhi, Inc. (NYSE:VHI) is the least popular one with only 6 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 calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on NTLA as the stock returned 29.8% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
