Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze CymaBay Therapeutics Inc (NASDAQ:CBAY) from the perspective of those elite funds.
CymaBay Therapeutics Inc (NASDAQ:CBAY) was in 23 hedge funds’ portfolios at the end of September. CBAY investors should pay attention to an increase in enthusiasm from smart money of late. There were 20 hedge funds in our database with CBAY holdings at the end of the previous quarter. Our calculations also showed that CBAY isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to analyze the recent hedge fund action encompassing CymaBay Therapeutics Inc (NASDAQ:CBAY).
Hedge fund activity in CymaBay Therapeutics Inc (NASDAQ:CBAY)
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CBAY over the last 13 quarters. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Baker Bros. Advisors held the most valuable stake in CymaBay Therapeutics Inc (NASDAQ:CBAY), which was worth $54.5 million at the end of the third quarter. On the second spot was Redmile Group which amassed $33.2 million worth of shares. Moreover, Perceptive Advisors, Adage Capital Management, and Foresite Capital were also bullish on CymaBay Therapeutics Inc (NASDAQ:CBAY), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers have jumped into CymaBay Therapeutics Inc (NASDAQ:CBAY) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in CymaBay Therapeutics Inc (NASDAQ:CBAY). Point72 Asset Management had $0.8 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $0.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., David Costen Haley’s HBK Investments, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CymaBay Therapeutics Inc (NASDAQ:CBAY) but similarly valued. These stocks are Materialise NV (NASDAQ:MTLS), McEwen Mining Inc (NYSE:MUX), Victory Capital Holdings, Inc. (NASDAQ:VCTR), and Invesco Value Municipal Income Trust (NYSE:IIM). This group of stocks’ market values are closest to CBAY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTLS | 4 | 12495 | 1 |
| MUX | 5 | 7411 | -1 |
| VCTR | 10 | 38211 | 3 |
| IIM | 2 | 712 | -2 |
| Average | 5.25 | 14707 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $226 million in CBAY’s case. Victory Capital Holdings, Inc. (NASDAQ:VCTR) is the most popular stock in this table. On the other hand Invesco Value Municipal Income Trust (NYSE:IIM) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks CymaBay Therapeutics Inc (NASDAQ:CBAY) 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.
