We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. That’s a big deal.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Intellia Therapeutics, Inc. (NASDAQ:NTLA) has seen an increase in enthusiasm from smart money recently. NTLA was in 12 hedge funds’ portfolios at the end of the second quarter of 2019. There were 10 hedge funds in our database with NTLA holdings at the end of the previous quarter. Our calculations also showed that NTLA isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the fresh hedge fund action regarding Intellia Therapeutics, Inc. (NASDAQ:NTLA).
What have hedge funds been doing with Intellia Therapeutics, Inc. (NASDAQ:NTLA)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in NTLA over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Samuel Isaly’s OrbiMed Advisors has the largest position in Intellia Therapeutics, Inc. (NASDAQ:NTLA), worth close to $5.4 million, corresponding to 0.1% of its total 13F portfolio. Coming in second is Millennium Management, managed by Israel Englander, which holds a $3.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers with similar optimism encompass Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Julian Baker and Felix Baker’s Baker Bros. Advisors.
Now, key money managers were breaking ground themselves. Renaissance Technologies created the largest position in Intellia Therapeutics, Inc. (NASDAQ:NTLA). Renaissance Technologies had $2.7 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also initiated a $1 million position during the quarter.
Let’s check out hedge fund activity in other stocks similar to Intellia Therapeutics, Inc. (NASDAQ:NTLA). These stocks are ADTRAN, Inc. (NASDAQ:ADTN), Adverum Biotechnologies, Inc. (NASDAQ:ADVM), UroGen Pharma Ltd. (NASDAQ:URGN), and Byline Bancorp, Inc. (NYSE:BY). This group of stocks’ market values match NTLA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADTN | 13 | 85342 | -2 |
| ADVM | 15 | 173801 | 3 |
| URGN | 12 | 146685 | -5 |
| BY | 5 | 19950 | 2 |
| Average | 11.25 | 106445 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $24 million in NTLA’s case. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the most popular stock in this table. On the other hand Byline Bancorp, Inc. (NYSE:BY) is the least popular one with only 5 bullish hedge fund positions. Intellia Therapeutics, Inc. (NASDAQ:NTLA) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately NTLA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NTLA were disappointed as the stock returned -18.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
