Here is What Hedge Funds Think About Chimerix Inc (CMRX)

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Is Chimerix Inc (NASDAQ:CMRX) a good stock to buy now? Prominent investors are indeed becoming more confident. The number of bullish hedge fund investments swelled by 2 in recent months. There were 15 hedge funds in our database with CMRX positions at the end of the third quarter. At the end of this article we will also compare CMRX to other stocks including Capitol Acquisition Corp III (NASDAQ:CLACU), B. Riley Financial Inc (NASDAQ:RILY), and Handy and Harman Ltd (NASDAQ:HNH) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, let’s go over the recent action regarding Chimerix Inc (NASDAQ:CMRX).

What does the smart money think about Chimerix Inc (NASDAQ:CMRX)?

Heading into the fourth quarter of 2016, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 15% from the second quarter of 2016. By comparison, 14 hedge funds held shares or bullish call options in CMRX heading into this year. So, let’s find out 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, Jeremy Green of Redmile Group holds the number one position in Chimerix Inc (NASDAQ:CMRX). According to regulatory filings, the fund has a $17.8 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is James A. Silverman of Opaleye Management holding a $4.3 million position; 2.3% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions include Oleg Nodelman’s EcoR1 Capital, Thomas Steyer’s Farallon Capital and Dennis Purcell’s Aisling Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, some big names were breaking ground themselves. EcoR1 Capital established the most outsized position in Chimerix Inc (NASDAQ:CMRX). The fund reportedly had $3.3 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks similar to Chimerix Inc (NASDAQ:CMRX). These stocks are Capitol Acquisition Corp III (NASDAQ:CLACU), B. Riley Financial Inc (NASDAQ:RILY), Handy and Harman Ltd (NASDAQ:HNH), and Inotek Pharmaceuticals Corp (NASDAQ:ITEK). This group of stocks’ market caps match CMRX’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $40 million in CMRX’s case. Inotek Pharmaceuticals Corp (NASDAQ:ITEK) is the most popular stock in this table. On the other hand Handy and Harman Ltd (NASDAQ:HNH) is the least popular one with only 3 bullish hedge fund positions. Chimerix Inc (NASDAQ:CMRX) 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. In this regard ITEK might be a better candidate to consider taking a long position in.

Disclosure: None