Hedge Funds Aren’t Crazy About Turning Point Therapeutics, Inc. (TPTX) Anymore

In this article we are going to use hedge fund sentiment as a tool and determine whether Turning Point Therapeutics, Inc. (NASDAQ:TPTX) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Turning Point Therapeutics, Inc. (NASDAQ:TPTX) worth your attention right now? Hedge funds were becoming less confident. The number of bullish hedge fund bets dropped by 7 recently. Turning Point Therapeutics, Inc. (NASDAQ:TPTX) was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 33. Our calculations also showed that TPTX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 28 hedge funds in our database with TPTX positions at the end of the second quarter.

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. Now we’re going to take a look at the latest hedge fund action regarding Turning Point Therapeutics, Inc. (NASDAQ:TPTX).

New York Stock Exchange

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

At third quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TPTX over the last 25 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Among these funds, Cormorant Asset Management held the most valuable stake in Turning Point Therapeutics, Inc. (NASDAQ:TPTX), which was worth $188.8 million at the end of the third quarter. On the second spot was OrbiMed Advisors which amassed $156.9 million worth of shares. Alkeon Capital Management, Citadel Investment Group, and Sectoral Asset 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 Cormorant Asset Management allocated the biggest weight to Turning Point Therapeutics, Inc. (NASDAQ:TPTX), around 7.67% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, setting aside 1.72 percent of its 13F equity portfolio to TPTX.

Since Turning Point Therapeutics, Inc. (NASDAQ:TPTX) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that elected to cut their positions entirely in the third quarter. It’s worth mentioning that Farallon Capital sold off the largest position of all the hedgies followed by Insider Monkey, worth an estimated $36.3 million in stock. Arsani William’s fund, Logos Capital, also dumped its stock, about $31.2 million worth. These transactions are interesting, as total hedge fund interest fell by 7 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Turning Point Therapeutics, Inc. (NASDAQ:TPTX). We will take a look at Associated Banc Corp (NYSE:ASB), SITE Centers Corp. (NYSE:SITC), Clover Health Investments, Corp. (NASDAQ:CLOV), Sabra Health Care REIT Inc (NASDAQ:SBRA), Bloom Energy Corporation (NYSE:BE), PJT Partners Inc (NYSE:PJT), and Tower Semiconductor Ltd. (NASDAQ:TSEM). This group of stocks’ market caps resemble TPTX’s market cap.

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As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $450 million in TPTX’s case. PJT Partners Inc (NYSE:PJT) is the most popular stock in this table. On the other hand Sabra Health Care REIT Inc (NASDAQ:SBRA) is the least popular one with only 11 bullish hedge fund positions. Turning Point Therapeutics, Inc. (NASDAQ:TPTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TPTX is 67.1. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately TPTX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TPTX were disappointed as the stock returned -28.2% since the end of September (through 12/31) 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.