The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded BridgeBio Pharma, Inc. (NASDAQ:BBIO) based on those filings.
Is BridgeBio Pharma, Inc. (NASDAQ:BBIO) a buy here? Hedge funds were in an optimistic mood. The number of long hedge fund positions increased by 1 in recent months. BridgeBio Pharma, Inc. (NASDAQ:BBIO) was in 27 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BBIO isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 26 hedge funds in our database with BBIO holdings at the end of March.
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 79 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.
Andreas Halvorsen of Viking Global
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Do Hedge Funds Think BBIO Is A Good Stock To Buy Now?
At second quarter’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the first quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in BBIO a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Andreas Halvorsen’s Viking Global has the most valuable position in BridgeBio Pharma, Inc. (NASDAQ:BBIO), worth close to $1.6228 billion, accounting for 4.9% of its total 13F portfolio. The second most bullish fund manager is Perceptive Advisors, led by Joseph Edelman, holding a $472.9 million position; 6.1% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions contain Lei Zhang’s Hillhouse Capital Management, Bihua Chen’s Cormorant Asset Management and David Cohen and Harold Levy’s Iridian Asset Management. In terms of the portfolio weights assigned to each position Perceptive Advisors allocated the biggest weight to BridgeBio Pharma, Inc. (NASDAQ:BBIO), around 6.14% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, earmarking 5.24 percent of its 13F equity portfolio to BBIO.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Octagon Capital Advisors, managed by Ting Jia, created the most outsized position in BridgeBio Pharma, Inc. (NASDAQ:BBIO). Octagon Capital Advisors had $23.2 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also initiated a $7 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Ken Griffin’s Citadel Investment Group, and Andre F. Perold’s HighVista Strategies.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as BridgeBio Pharma, Inc. (NASDAQ:BBIO) but similarly valued. We will take a look at CAE, Inc. (NYSE:CAE), Smartsheet Inc. (NYSE:SMAR), Kimco Realty Corp (NYSE:KIM), Globant SA (NYSE:GLOB), Service Corporation International (NYSE:SCI), Phillips 66 Partners LP (NYSE:PSXP), and Sealed Air Corporation (NYSE:SEE). This group of stocks’ market valuations match BBIO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAE | 10 | 101618 | -7 |
| SMAR | 49 | 1484257 | 10 |
| KIM | 20 | 218918 | 3 |
| GLOB | 23 | 447290 | 6 |
| SCI | 24 | 527197 | 1 |
| PSXP | 5 | 36056 | 0 |
| SEE | 28 | 705369 | 1 |
| Average | 22.7 | 502958 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $503 million. That figure was $2790 million in BBIO’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. BridgeBio Pharma, Inc. (NASDAQ:BBIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BBIO is 61. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately BBIO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BBIO were disappointed as the stock returned -21.3% since the end of June (through 10/15) 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.
