We can judge whether Atreca, Inc. (NASDAQ:BCEL) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Is Atreca, Inc. (NASDAQ:BCEL) a buy right now? Investors who are in the know are getting less bullish. The number of long hedge fund bets fell by 3 recently. Our calculations also showed that BCEL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Ken Griffin of Citadel Investment Group
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a glance at the fresh hedge fund action surrounding Atreca, Inc. (NASDAQ:BCEL).
What have hedge funds been doing with Atreca, Inc. (NASDAQ:BCEL)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BCEL over the last 17 quarters. With the smart money’s capital changing hands, there exist a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Julian Baker and Felix Baker’s Baker Bros. Advisors has the largest position in Atreca, Inc. (NASDAQ:BCEL), worth close to $43.2 million, corresponding to 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Oleg Nodelman of EcoR1 Capital, with an $18.1 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Jeremy Green’s Redmile Group, Srini Akkaraju and Michael Dybbs’s Samsara BioCapital and Bihua Chen’s Cormorant Asset Management. In terms of the portfolio weights assigned to each position, Samsara BioCapital allocated the biggest weight to Atreca, Inc. (NASDAQ:BCEL), around 4.93% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, designating 2.29 percent of its 13F equity portfolio to BCEL.
Since Atreca, Inc. (NASDAQ:BCEL) has faced bearish sentiment from the smart money, logic holds that there was a specific group of hedgies that elected to cut their full holdings last quarter. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the largest stake of the 750 funds followed by Insider Monkey, worth an estimated $1.1 million in stock. Anand Parekh’s fund, Alyeska Investment Group, also said goodbye to its stock, about $0.9 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Atreca, Inc. (NASDAQ:BCEL) but similarly valued. These stocks are Care.com Inc (NYSE:CRCM), P.A.M. Transportation Services, Inc. (NASDAQ:PTSI), Spirit of Texas Bancshares, Inc. (NASDAQ:STXB), and Civista Bancshares, Inc. (NASDAQ:CIVB). This group of stocks’ market caps resembles BCEL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRCM | 17 | 115902 | -4 |
| PTSI | 1 | 23187 | 0 |
| STXB | 4 | 16316 | 3 |
| CIVB | 6 | 23279 | 2 |
| Average | 7 | 44671 | 0.25 |
View the table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $88 million in BCEL’s case. Care.com Inc (NYSE:CRCM) is the most popular stock in this table. On the other hand, P.A.M. Transportation Services, Inc. (NASDAQ:PTSI) is the least popular one with only 1 bullish hedge fund positions. Atreca, Inc. (NASDAQ:BCEL) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately, BCEL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BCEL investors were disappointed as the stock returned -18.8% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.