Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Nantkwest Inc (NASDAQ:NK).
Is Nantkwest Inc (NASDAQ:NK) going to take off soon? The smart money is taking a pessimistic view. The number of bullish hedge fund bets fell by 3 lately. Our calculations also showed that NK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are perceived as worthless, old financial vehicles of the past. While there are over 8000 funds in operation at the moment, Our researchers look at the masters of this group, about 850 funds. Most estimates calculate that this group of people have their hands on bulk of the smart money’s total capital, and by tracking their highest performing investments, Insider Monkey has unsheathed a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Ken Griffin of Citadel Investment Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a gander at the key hedge fund action regarding Nantkwest Inc (NASDAQ:NK).
How are hedge funds trading Nantkwest Inc (NASDAQ:NK)?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NK over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the largest position in Nantkwest Inc (NASDAQ:NK). Renaissance Technologies has a $4.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $0.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain Michael Gelband’s ExodusPoint Capital, Murray Stahl’s Horizon Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to Nantkwest Inc (NASDAQ:NK), around 0.01% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to NK.
Due to the fact that Nantkwest Inc (NASDAQ:NK) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of money managers who were dropping their positions entirely in the third quarter. At the top of the heap, David Nguyen and Nancy Oh’s One68 Global Capital dumped the biggest investment of all the hedgies watched by Insider Monkey, valued at about $0.2 million in stock. Ari Zweiman’s fund, 683 Capital Partners, also cut its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to Nantkwest Inc (NASDAQ:NK). These stocks are MacroGenics Inc (NASDAQ:MGNX), UFP Technologies, Inc. (NASDAQ:UFPT), Independent Bank Corporation (NASDAQ:IBCP), and Urovant Sciences Ltd. (NASDAQ:UROV). All of these stocks’ market caps resemble NK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGNX | 16 | 34052 | -1 |
| UFPT | 9 | 42454 | -1 |
| IBCP | 12 | 26713 | -1 |
| UROV | 7 | 48346 | -6 |
| Average | 11 | 37891 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $6 million in NK’s case. MacroGenics Inc (NASDAQ:MGNX) is the most popular stock in this table. On the other hand Urovant Sciences Ltd. (NASDAQ:UROV) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Nantkwest Inc (NASDAQ:NK) is even less popular than UROV. Hedge funds clearly dropped the ball on NK as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on NK as the stock returned 134% so far in the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
