After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards InVitae Corporation (NYSE:NVTA).
Is InVitae Corporation (NYSE:NVTA) the right pick for your portfolio? Prominent investors were selling. The number of bullish hedge fund bets dropped by 1 lately. InVitae Corporation (NYSE:NVTA) was in 34 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that NVTA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Felix Baker of Baker Bros.
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 battery 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 we’re going to check out the fresh hedge fund action encompassing InVitae Corporation (NYSE:NVTA).
Do Hedge Funds Think NVTA Is A Good Stock To Buy Now?
At first quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NVTA over the last 23 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in InVitae Corporation (NYSE:NVTA) was held by ARK Investment Management, which reported holding $916.2 million worth of stock at the end of December. It was followed by Baker Bros. Advisors with a $601.8 million position. Other investors bullish on the company included Casdin Capital, Perceptive Advisors, and Redmile Group. In terms of the portfolio weights assigned to each position Casdin Capital allocated the biggest weight to InVitae Corporation (NYSE:NVTA), around 13.89% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, designating 2.61 percent of its 13F equity portfolio to NVTA.
Because InVitae Corporation (NYSE:NVTA) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies who sold off their entire stakes in the first quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest position of the “upper crust” of funds watched by Insider Monkey, totaling close to $43.8 million in stock, and Daniel S. Och’s OZ Management was right behind this move, as the fund said goodbye to about $10.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as InVitae Corporation (NYSE:NVTA) but similarly valued. These stocks are Cabot Oil & Gas Corporation (NYSE:COG), JOYY Inc. (NASDAQ:YY), Manhattan Associates, Inc. (NASDAQ:MANH), Thor Industries, Inc. (NYSE:THO), United Therapeutics Corporation (NASDAQ:UTHR), ICL Group Ltd. (NYSE:ICL), and Brunswick Corporation (NYSE:BC). All of these stocks’ market caps match NVTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COG | 20 | 135171 | 1 |
| YY | 20 | 316827 | 0 |
| MANH | 28 | 303302 | 5 |
| THO | 21 | 183769 | -3 |
| UTHR | 42 | 2116890 | 6 |
| ICL | 4 | 43595 | -1 |
| BC | 42 | 1037373 | 6 |
| Average | 25.3 | 590990 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $591 million. That figure was $2759 million in NVTA’s case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 4 bullish hedge fund positions. InVitae Corporation (NYSE:NVTA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NVTA is 72.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately NVTA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NVTA were disappointed as the stock returned -9.8% since the end of March (through 6/25) 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 many of these stocks already outperformed the market since 2019.
Follow Invitae Corp (NYSE:NVTA)
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Disclosure: None. This article was originally published at Insider Monkey.
