Hedge Funds Are Buying Cytokinetics, Inc. (CYTK)

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cytokinetics, Inc. (NASDAQ:CYTK).

Is Cytokinetics, Inc. (NASDAQ:CYTK) an outstanding investment now? The smart money is becoming hopeful. The number of bullish hedge fund positions rose by 4 in recent months. At the end of this article we will also compare CYTK to other stocks including PowerSecure International, Inc. (NASDAQ:POWR), Cohu, Inc. (NASDAQ:COHU), and Fifth Street Senior Floating Rate Corp (NASDAQ:FSFR) to get a better sense of its popularity.

With all of this in mind, let’s check out the fresh action surrounding Cytokinetics, Inc. (NASDAQ:CYTK).

How have hedgies been trading Cytokinetics, Inc. (NASDAQ:CYTK)?

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Mark Lampert’s Biotechnology Value Fund / BVF Inc has the biggest position in Cytokinetics, Inc. (NASDAQ:CYTK), worth close to $14.1 million, accounting for 2.8% of its total 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $5.4 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish consist of D. E. Shaw’s D E Shaw, and Jim Simons’s Renaissance Technologies.

Consequently, key money managers have been driving this bullishness. Sabby Capital, managed by Hal Mintz, initiated the most outsized call position in Cytokinetics, Inc. (NASDAQ:CYTK). Sabby Capital had $2.1 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $0.5 million position during the quarter. The other funds with brand new CYTK positions are Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, Cliff Asness’s AQR Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cytokinetics, Inc. (NASDAQ:CYTK) but similarly valued. These stocks are PowerSecure International, Inc. (NASDAQ:POWR), Cohu, Inc. (NASDAQ:COHU), Fifth Street Senior Floating Rate Corp (NASDAQ:FSFR), and Empresas ICA SA (ADR) (NYSE:ICA). This group of stocks’ market caps are similar to CYTK’s market cap.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $47 million in CYTK’s case. Cohu, Inc. (NASDAQ:COHU) is the most popular stock in this table. On the other hand Fifth Street Senior Floating Rate Corp (NASDAQ:FSFR) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Cytokinetics, Inc. (NASDAQ:CYTK) 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.