Hedge Funds Are Piling Into Chimerix Inc (CMRX)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. What do these smart investors think about Chimerix Inc (NASDAQ:CMRX)?

Chimerix Inc (NASDAQ:CMRX) investors should pay attention to an increase in enthusiasm from smart money recently. Chimerix Inc (NASDAQ:CMRX) was in 19 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 16 hedge funds in our database with CMRX holdings at the end of March. Our calculations also showed that CMRX 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.

Nick Thakore of Diametric Capital

With all of this in mind we’re going to review the new hedge fund action regarding Chimerix Inc (NASDAQ:CMRX).

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

At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in CMRX a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

The largest stake in Chimerix Inc (NASDAQ:CMRX) was held by Opaleye Management, which reported holding $37 million worth of stock at the end of June. It was followed by Point72 Asset Management with a $25.5 million position. Other investors bullish on the company included Renaissance Technologies, Deerfield Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Opaleye Management allocated the biggest weight to Chimerix Inc (NASDAQ:CMRX), around 6.15% of its 13F portfolio. Acuta Capital Partners is also relatively very bullish on the stock, designating 1.63 percent of its 13F equity portfolio to CMRX.

Consequently, key money managers were breaking ground themselves. Integral Health Asset Management, managed by Bhagwan Jay Rao, initiated the most valuable position in Chimerix Inc (NASDAQ:CMRX). Integral Health Asset Management had $1.2 million invested in the company at the end of the quarter. Nick Thakore’s Diametric Capital also initiated a $0.6 million position during the quarter. The following funds were also among the new CMRX investors: Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital), Thomas Bailard’s Bailard Inc, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks similar to Chimerix Inc (NASDAQ:CMRX). We will take a look at Barings BDC, Inc. (NYSE:BBDC), Valhi, Inc. (NYSE:VHI), Koppers Holdings Inc. (NYSE:KOP), Revlon Inc (NYSE:REV), MeiraGTx Holdings plc (NASDAQ:MGTX), Gamco Investors Inc. (NYSE:GBL), and Evolus, Inc. (NASDAQ:EOLS). All of these stocks’ market caps resemble CMRX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $152 million in CMRX’s case. Revlon Inc (NYSE:REV) is the most popular stock in this table. On the other hand Valhi, Inc. (NYSE:VHI) is the least popular one with only 4 bullish hedge fund positions. Chimerix Inc (NASDAQ:CMRX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CMRX is 57.7. 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% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately CMRX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CMRX were disappointed as the stock returned -33.4% since the end of June (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 many of these stocks already outperformed the market since 2019.

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