Hedge Funds Are Crazy About Ocular Therapeutix Inc (OCUL)

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was Ocular Therapeutix Inc (NASDAQ:OCUL).

Ocular Therapeutix Inc (NASDAQ:OCUL) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. OCUL has experienced an increase in hedge fund interest recently. There were 20 hedge funds in our database with OCUL holdings at the end of March. Our calculations also showed that OCUL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 S&P 500 ETFs by 79 percentage points since March 2017 (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.

Andre Perold of HighVista Strategies

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. With all of this in mind let’s take a peek at the latest hedge fund action encompassing Ocular Therapeutix Inc (NASDAQ:OCUL).

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

At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OCUL over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Opaleye Management was the largest shareholder of Ocular Therapeutix Inc (NASDAQ:OCUL), with a stake worth $91.9 million reported as of the end of June. Trailing Opaleye Management was Rubric Capital Management, which amassed a stake valued at $30.6 million. Two Sigma Advisors, Great Point Partners, and RA Capital Management 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 Opaleye Management allocated the biggest weight to Ocular Therapeutix Inc (NASDAQ:OCUL), around 15.26% of its 13F portfolio. Kamunting Street Capital is also relatively very bullish on the stock, dishing out 3.58 percent of its 13F equity portfolio to OCUL.

With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Eversept Partners, managed by Kamran Moghtaderi, created the most valuable position in Ocular Therapeutix Inc (NASDAQ:OCUL). Eversept Partners had $2.1 million invested in the company at the end of the quarter. Andre F. Perold’s HighVista Strategies also initiated a $0.9 million position during the quarter. The other funds with brand new OCUL positions are Mika Toikka’s AlphaCrest Capital Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Jinghua Yan’s TwinBeech Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Ocular Therapeutix Inc (NASDAQ:OCUL). We will take a look at MarineMax, Inc. (NYSE:HZO), CEVA, Inc. (NASDAQ:CEVA), Silverback Therapeutics, Inc. (NASDAQ:SBTX), National HealthCare Corporation (NYSE:NHC), Meridian Bancorp, Inc. (NASDAQ:EBSB), Anterix Inc. (NASDAQ:ATEX), and IES Holdings, Inc. (NASDAQ:IESC). This group of stocks’ market caps are closest to OCUL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $209 million in OCUL’s case. Silverback Therapeutics, Inc. (NASDAQ:SBTX) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSE:NHC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Ocular Therapeutix Inc (NASDAQ:OCUL) is more popular among hedge funds. Our overall hedge fund sentiment score for OCUL is 88. 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 OCUL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OCUL were disappointed as the stock returned -51.3% 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.