At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Cardiff Oncology, Inc. (NASDAQ:CRDF) makes for a good investment right now.
Is Cardiff Oncology, Inc. (NASDAQ:CRDF) worth your attention right now? Investors who are in the know were taking a bullish view. The number of long hedge fund positions went up by 10 in recent months. Cardiff Oncology, Inc. (NASDAQ:CRDF) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CRDF isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
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 66 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.
Peter Kolchinsky of RA Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a gander at the key hedge fund action encompassing Cardiff Oncology, Inc. (NASDAQ:CRDF).
Do Hedge Funds Think CRDF Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 143% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CRDF over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Cardiff Oncology, Inc. (NASDAQ:CRDF) was held by RA Capital Management, which reported holding $46.7 million worth of stock at the end of September. It was followed by Opaleye Management with a $24.6 million position. Other investors bullish on the company included Corriente Advisors, Polar Capital, and Acuta Capital Partners. In terms of the portfolio weights assigned to each position Corriente Advisors allocated the biggest weight to Cardiff Oncology, Inc. (NASDAQ:CRDF), around 6.55% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, dishing out 4.81 percent of its 13F equity portfolio to CRDF.
Now, specific money managers were breaking ground themselves. RA Capital Management, managed by Peter Kolchinsky, established the most outsized position in Cardiff Oncology, Inc. (NASDAQ:CRDF). RA Capital Management had $46.7 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also initiated a $6.7 million position during the quarter. The other funds with brand new CRDF positions are Guy Levy’s Soleus Capital, Alan Frazier’s Frazier Healthcare Partners, and Farallon Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cardiff Oncology, Inc. (NASDAQ:CRDF) but similarly valued. These stocks are ShotSpotter, Inc. (NASDAQ:SSTI), Waitr Holdings Inc. (NASDAQ:WTRH), iBio, Inc. (NYSE:IBIO), The First of Long Island Corporation (NASDAQ:FLIC), Hoegh LNG Partners LP (NYSE:HMLP), Customers Bancorp Inc (NYSE:CUBI), and IMARA Inc. (NASDAQ:IMRA). This group of stocks’ market values resemble CRDF’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSTI | 10 | 27169 | 3 |
| WTRH | 13 | 62868 | -4 |
| IBIO | 3 | 939 | 1 |
| FLIC | 10 | 22272 | -1 |
| HMLP | 5 | 12459 | 0 |
| CUBI | 10 | 12964 | -5 |
| IMRA | 5 | 78482 | -1 |
| Average | 8 | 31022 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $114 million in CRDF’s case. Waitr Holdings Inc. (NASDAQ:WTRH) is the most popular stock in this table. On the other hand iBio, Inc. (NYSE:IBIO) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Cardiff Oncology, Inc. (NASDAQ:CRDF) is more popular among hedge funds. Our overall hedge fund sentiment score for CRDF 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on CRDF as the stock returned 43.1% since the end of September (through 12/14) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.