Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Natera Inc (NASDAQ:NTRA) changed recently.
Natera Inc (NASDAQ:NTRA) investors should pay attention to an increase in support from the world’s most elite money managers lately. Natera Inc (NASDAQ:NTRA) was in 52 hedge funds’ portfolios at the end of June. The all time high for this statistic is 46. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 41 hedge funds in our database with NTRA holdings at the end of March. Our calculations also showed that NTRA isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 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.
Paul Marshall of Marshall Wace
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Do Hedge Funds Think NTRA Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the first quarter of 2020. On the other hand, there were a total of 35 hedge funds with a bullish position in NTRA a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of Natera Inc (NASDAQ:NTRA), with a stake worth $233.6 million reported as of the end of June. Trailing OrbiMed Advisors was Millennium Management, which amassed a stake valued at $217.1 million. Marshall Wace LLP, Holocene Advisors, and OZ 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 Foresite Capital allocated the biggest weight to Natera Inc (NASDAQ:NTRA), around 15.32% of its 13F portfolio. Hudson Executive Capital is also relatively very bullish on the stock, designating 4.44 percent of its 13F equity portfolio to NTRA.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in Natera Inc (NASDAQ:NTRA). Marshall Wace LLP had $144 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also made a $131.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Farallon Capital, and Aaron Cowen’s Suvretta Capital Management.
Let’s check out hedge fund activity in other stocks similar to Natera Inc (NASDAQ:NTRA). These stocks are Banco de Chile (NYSE:BCH), Dolby Laboratories, Inc. (NYSE:DLB), Comerica Incorporated (NYSE:CMA), Beyond Meat, Inc. (NASDAQ:BYND), DXC Technology Company (NYSE:DXC), Formula One Group (NASDAQ:FWONA), and Amdocs Limited (NASDAQ:DOX). All of these stocks’ market caps match NTRA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCH | 7 | 45933 | 2 |
| DLB | 31 | 748482 | -3 |
| CMA | 33 | 547103 | 1 |
| BYND | 17 | 170584 | -9 |
| DXC | 30 | 851210 | 2 |
| FWONA | 22 | 300534 | 3 |
| DOX | 29 | 796947 | -3 |
| Average | 24.1 | 494399 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $494 million. That figure was $1896 million in NTRA’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Natera Inc (NASDAQ:NTRA) is more popular among hedge funds. Our overall hedge fund sentiment score for NTRA is 90. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately NTRA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NTRA were disappointed as the stock returned -1% since the end of the second quarter (through 10/1) 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.
Follow Natera Inc. (NASDAQ:NTRA)
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Disclosure: None. This article was originally published at Insider Monkey.
