Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Viking Therapeutics, Inc. (NASDAQ:VKTX).
Viking Therapeutics, Inc. (NASDAQ:VKTX) was in 27 hedge funds’ portfolios at the end of September. VKTX has experienced an increase in support from the world’s most elite money managers in recent months. There were 18 hedge funds in our database with VKTX positions at the end of the previous quarter. Our calculations also showed that vktx isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the fresh hedge fund action surrounding Viking Therapeutics, Inc. (NASDAQ:VKTX).
What have hedge funds been doing with Viking Therapeutics, Inc. (NASDAQ:VKTX)?
At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter of 2018. By comparison, 9 hedge funds held shares or bullish call options in VKTX heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Park West Asset Management held the most valuable stake in Viking Therapeutics, Inc. (NASDAQ:VKTX), which was worth $22.1 million at the end of the third quarter. On the second spot was Balyasny Asset Management which amassed $19.1 million worth of shares. Moreover, Citadel Investment Group, Opaleye Management, and Deerfield Management were also bullish on Viking Therapeutics, Inc. (NASDAQ:VKTX), allocating a large percentage of their portfolios to this stock.
Consequently, specific money managers were leading the bulls’ herd. Deerfield Management, managed by James E. Flynn, created the largest position in Viking Therapeutics, Inc. (NASDAQ:VKTX). Deerfield Management had $8 million invested in the company at the end of the quarter. Julian Baker and Felix Baker’s Baker Bros. Advisors also made a $7.4 million investment in the stock during the quarter. The other funds with brand new VKTX positions are Principal Global Investors’s Columbus Circle Investors, Ori Hershkovitz’s Nexthera Capital, and Lawrence Hawkins’s Prosight Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Viking Therapeutics, Inc. (NASDAQ:VKTX). We will take a look at CareDx, Inc. (NASDAQ:CDNA), Century Aluminum Co (NASDAQ:CENX), COMSCORE, Inc. (NASDAQ:SCOR), and eXp World Holdings, Inc. (NASDAQ:EXPI). This group of stocks’ market values resemble VKTX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CDNA | 19 | 118417 | 4 |
| CENX | 11 | 71005 | -5 |
| SCOR | 13 | 248673 | -2 |
| EXPI | 5 | 1449 | 3 |
| Average | 12 | 109886 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $133 million in VKTX’s case. CareDx, Inc. (NASDAQ:CDNA) is the most popular stock in this table. On the other hand eXp World Holdings, Inc. (NASDAQ:EXPI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Viking Therapeutics, Inc. (NASDAQ:VKTX) 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.
