Do Hedge Funds Love Curis, Inc. (CRIS)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Curis, Inc. (NASDAQ:CRIS).

Is Curis, Inc. (NASDAQ:CRIS) an excellent investment now? Prominent investors were cutting their exposure. The number of long hedge fund positions were trimmed by 5 in recent months. Curis, Inc. (NASDAQ:CRIS) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 29. Our calculations also showed that CRIS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 29 hedge funds in our database with CRIS holdings at the end of March.

At the moment there are dozens of gauges stock market investors use to assess stocks. Some of the most under-the-radar gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the broader indices by a superb margin (see the details here). 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.

Peter Kolchinsky of RA Capital Management

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. Now we’re going to review the new hedge fund action encompassing Curis, Inc. (NASDAQ:CRIS).

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

At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in CRIS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, RA Capital Management held the most valuable stake in Curis, Inc. (NASDAQ:CRIS), which was worth $57.6 million at the end of the second quarter. On the second spot was Point72 Asset Management which amassed $41.5 million worth of shares. Adage Capital Management, Octagon Capital Advisors, and OrbiMed 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 Sio Capital allocated the biggest weight to Curis, Inc. (NASDAQ:CRIS), around 6.75% of its 13F portfolio. Octagon Capital Advisors is also relatively very bullish on the stock, setting aside 5.99 percent of its 13F equity portfolio to CRIS.

Since Curis, Inc. (NASDAQ:CRIS) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of money managers who were dropping their entire stakes in the second quarter. It’s worth mentioning that Neil Shahrestani’s Ikarian Capital said goodbye to the largest investment of all the hedgies followed by Insider Monkey, worth close to $13.8 million in stock, and Farallon Capital was right behind this move, as the fund dumped about $11.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 5 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Curis, Inc. (NASDAQ:CRIS) but similarly valued. These stocks are Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL), Central Pacific Financial Corp. (NYSE:CPF), Antares Pharma Inc (NASDAQ:ATRS), New Senior Investment Group Inc (NYSE:SNR), Movado Group, Inc (NYSE:MOV), Calliditas Therapeutics AB (publ) (NASDAQ:CALT), and Evelo Biosciences, Inc. (NASDAQ:EVLO). This group of stocks’ market caps are similar to CRIS’s market cap.

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As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $314 million in CRIS’s case. Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) is the most popular stock in this table. On the other hand Calliditas Therapeutics AB (publ) (NASDAQ:CALT) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Curis, Inc. (NASDAQ:CRIS) is more popular among hedge funds. Our overall hedge fund sentiment score for CRIS is 74.8. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately CRIS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CRIS were disappointed as the stock returned -9% since the end of the second quarter (through 10/22) 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 since 2019.

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