The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Turning Point Therapeutics, Inc. (NASDAQ:TPTX) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Turning Point Therapeutics, Inc. (NASDAQ:TPTX) was in 30 hedge funds’ portfolios at the end of June. The all time high for this statistics is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TPTX has seen an increase in hedge fund sentiment recently. There were 19 hedge funds in our database with TPTX holdings at the end of March. Our calculations also showed that TPTX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 58 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.
Samuel Isaly of OrbiMed Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Keeping this in mind let’s take a glance at the new hedge fund action encompassing Turning Point Therapeutics, Inc. (NASDAQ:TPTX).
How have hedgies been trading Turning Point Therapeutics, Inc. (NASDAQ:TPTX)?
Heading into the third quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 58% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TPTX over the last 20 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the most valuable position in Turning Point Therapeutics, Inc. (NASDAQ:TPTX). OrbiMed Advisors has a $177.3 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Cormorant Asset Management, led by Bihua Chen, holding a $176.8 million position; the fund has 6.7% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Panayotis Takis Sparaggis’s Alkeon Capital Management, Joseph Edelman’s Perceptive Advisors and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management. In terms of the portfolio weights assigned to each position Cormorant Asset Management allocated the biggest weight to Turning Point Therapeutics, Inc. (NASDAQ:TPTX), around 6.75% of its 13F portfolio. Burrage Capital Management is also relatively very bullish on the stock, earmarking 3.49 percent of its 13F equity portfolio to TPTX.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Turning Point Therapeutics, Inc. (NASDAQ:TPTX) headfirst. Millennium Management, managed by Israel Englander, assembled the most valuable position in Turning Point Therapeutics, Inc. (NASDAQ:TPTX). Millennium Management had $6.6 million invested in the company at the end of the quarter. John Osterweis’s Osterweis Capital Management also initiated a $3.6 million position during the quarter. The following funds were also among the new TPTX investors: Anand Parekh’s Alyeska Investment Group, Lawrence Hawkins’s Prosight Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now review hedge fund activity in other stocks similar to Turning Point Therapeutics, Inc. (NASDAQ:TPTX). We will take a look at Amarin Corporation plc (NASDAQ:AMRN), Macquarie Infrastructure Corporation (NYSE:MIC), Itron, Inc. (NASDAQ:ITRI), AllianceBernstein Holding LP (NYSE:AB), Endava plc (NYSE:DAVA), Compania Cervecerias Unidas S.A. (NYSE:CCU), and Millicom International Cellular S.A. (NASDAQ:TIGO). This group of stocks’ market caps are similar to TPTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMRN | 32 | 477249 | -7 |
| MIC | 38 | 564202 | 8 |
| ITRI | 13 | 300874 | -6 |
| AB | 7 | 23909 | 0 |
| DAVA | 8 | 76269 | -1 |
| CCU | 8 | 22635 | -3 |
| TIGO | 8 | 61613 | 1 |
| Average | 16.3 | 218107 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $525 million in TPTX’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand AllianceBernstein Holding LP (NYSE:AB) is the least popular one with only 7 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. Our overall hedge fund sentiment score for TPTX is 77.1. 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 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 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on TPTX as the stock returned 24.9% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
