Hedge Funds Are Dumping Mirati Therapeutics, Inc. (MRTX)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Mirati Therapeutics, Inc. (NASDAQ:MRTX) in this article.

Mirati Therapeutics, Inc. (NASDAQ:MRTX) shareholders have witnessed a decrease in hedge fund interest in recent months. Mirati Therapeutics, Inc. (NASDAQ:MRTX) was in 46 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 57. There were 55 hedge funds in our database with MRTX holdings at the end of June. Our calculations also showed that MRTX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s check out the recent hedge fund action surrounding Mirati Therapeutics, Inc. (NASDAQ:MRTX).

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

At the end of the third quarter, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in MRTX over the last 25 quarters. 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, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Mirati Therapeutics, Inc. (NASDAQ:MRTX), which was worth $884.6 million at the end of the third quarter. On the second spot was Perceptive Advisors which amassed $599.3 million worth of shares. Baker Bros. Advisors, OrbiMed Advisors, and Holocene Advisors 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 Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to Mirati Therapeutics, Inc. (NASDAQ:MRTX), around 13.89% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, dishing out 8.7 percent of its 13F equity portfolio to MRTX.

Due to the fact that Mirati Therapeutics, Inc. (NASDAQ:MRTX) has faced a decline in interest from the smart money, we can see that there lies a certain “tier” of hedgies that slashed their entire stakes heading into Q4. Interestingly, Jeffrey Jay and David Kroin’s Great Point Partners dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, worth about $16.2 million in stock. Doron Breen and Mori Arkin’s fund, Sphera Global Healthcare Fund, also dumped its stock, about $7.6 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 9 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Mirati Therapeutics, Inc. (NASDAQ:MRTX) but similarly valued. We will take a look at West Fraser Timber Co. Ltd. (NYSE:WFG), XPO Logistics Inc (NYSE:XPO), Tempur Sealy International Inc. (NYSE:TPX), Concentrix Corporation (NASDAQ:CNXC), AECOM (NYSE:ACM), Biohaven Pharmaceutical Holding Company Ltd. (NYSE:BHVN), and Algonquin Power & Utilities Corp. (NYSE:AQN). This group of stocks’ market values are similar to MRTX’s market value.

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As you can see these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $891 million. That figure was $2796 million in MRTX’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand Algonquin Power & Utilities Corp. (NYSE:AQN) is the least popular one with only 15 bullish hedge fund positions. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MRTX is 65.8. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately MRTX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MRTX were disappointed as the stock returned -22.7% since the end of September (through 11/30) 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.

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Disclosure: None. This article was originally published at Insider Monkey.

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