We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Turning Point Therapeutics, Inc. (NASDAQ:TPTX) based on those filings.
Turning Point Therapeutics, Inc. (NASDAQ:TPTX) has seen an increase in support from the world’s most elite money managers of late. TPTX was in 23 hedge funds’ portfolios at the end of December. There were 20 hedge funds in our database with TPTX positions at the end of the previous quarter. Our calculations also showed that TPTX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To the average investor there are a lot of gauges market participants use to appraise stocks. Some of the most innovative gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the broader indices by a solid amount (see the details here).
James E. Flynn of Deerfield Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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. Keeping this in mind let’s take a look at the key hedge fund action encompassing Turning Point Therapeutics, Inc. (NASDAQ:TPTX).
Hedge fund activity in Turning Point Therapeutics, Inc. (NASDAQ:TPTX)
At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TPTX over the last 18 quarters. So, let’s find out 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, Cormorant Asset Management, managed by Bihua Chen, holds the most valuable position in Turning Point Therapeutics, Inc. (NASDAQ:TPTX). Cormorant Asset Management has a $211.6 million position in the stock, comprising 8.4% of its 13F portfolio. Sitting at the No. 2 spot is OrbiMed Advisors, managed by Samuel Isaly, which holds a $171 million position; 2.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that are bullish comprise Joseph Edelman’s Perceptive Advisors, James E. Flynn’s Deerfield Management and Panayotis Takis Sparaggis’s Alkeon Capital Management. In terms of the portfolio weights assigned to each position Corriente Advisors allocated the biggest weight to Turning Point Therapeutics, Inc. (NASDAQ:TPTX), around 9.54% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, earmarking 8.44 percent of its 13F equity portfolio to TPTX.
Consequently, some big names have been driving this bullishness. Corriente Advisors, managed by Mark Hart III, initiated the largest position in Turning Point Therapeutics, Inc. (NASDAQ:TPTX). Corriente Advisors had $17.8 million invested in the company at the end of the quarter. Michael Rockefeller and Karl Kroeker’s Woodline Partners also initiated a $12.4 million position during the quarter. The following funds were also among the new TPTX investors: Brian Ashford-Russell and Tim Woolley’s Polar Capital, Greg Martinez’s Parkman Healthcare Partners, and Mitchell Blutt’s Consonance Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Turning Point Therapeutics, Inc. (NASDAQ:TPTX) but similarly valued. These stocks are Trustmark Corp (NASDAQ:TRMK), eHealth, Inc. (NASDAQ:EHTH), DiamondRock Hospitality Company (NYSE:DRH), and Genworth Financial Inc (NYSE:GNW). All of these stocks’ market caps are closest to TPTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRMK | 16 | 18756 | 1 |
| EHTH | 26 | 458734 | 4 |
| DRH | 17 | 72890 | -1 |
| GNW | 32 | 278398 | 3 |
| Average | 22.75 | 207195 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $207 million. That figure was $561 million in TPTX’s case. Genworth Financial Inc (NYSE:GNW) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 16 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately TPTX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TPTX were disappointed as the stock returned -27% during the same time period 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.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
