Is ATRA Stock A Buy or Sell?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million 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 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Atara Biotherapeutics Inc (NASDAQ:ATRA) based on those filings.

Is ATRA stock a buy? Hedge fund interest in Atara Biotherapeutics Inc (NASDAQ:ATRA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ATRA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Northwest Bancshares, Inc. (NASDAQ:NWBI), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), and Kadant Inc. (NYSE:KAI) to gather more data points.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Seth Klarman of Baupost Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s analyze the key hedge fund action surrounding Atara Biotherapeutics Inc (NASDAQ:ATRA).

Do Hedge Funds Think ATRA Is A Good Stock To Buy Now?

At Q4’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ATRA over the last 22 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.

The largest stake in Atara Biotherapeutics Inc (NASDAQ:ATRA) was held by Baupost Group, which reported holding $178.8 million worth of stock at the end of December. It was followed by Maverick Capital with a $143.8 million position. Other investors bullish on the company included Redmile Group, Consonance Capital Management, and Bridger Management. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to Atara Biotherapeutics Inc (NASDAQ:ATRA), around 6.48% of its 13F portfolio. Antipodean Advisors is also relatively very bullish on the stock, dishing out 5.51 percent of its 13F equity portfolio to ATRA.

Seeing as Atara Biotherapeutics Inc (NASDAQ:ATRA) has faced a decline in interest from the aggregate hedge fund industry, we can see that there is a sect of funds that slashed their full holdings last quarter. Interestingly, Stephen DuBois’s Camber Capital Management dumped the biggest investment of the 750 funds followed by Insider Monkey, comprising about $18.1 million in stock. Neil Shahrestani’s fund, Ikarian Capital, also dumped its stock, about $5.5 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Atara Biotherapeutics Inc (NASDAQ:ATRA) but similarly valued. These stocks are Northwest Bancshares, Inc. (NASDAQ:NWBI), Seacoast Banking Corporation of Florida (NASDAQ:SBCF), Kadant Inc. (NYSE:KAI), USANA Health Sciences, Inc. (NYSE:USNA), Sonic Automotive Inc (NYSE:SAH), AMTD International Inc. (NYSE:HKIB), and McGrath RentCorp (NASDAQ:MGRC). All of these stocks’ market caps are similar to ATRA’s market cap.

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As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $662 million in ATRA’s case. USANA Health Sciences, Inc. (NYSE:USNA) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Atara Biotherapeutics Inc (NASDAQ:ATRA) is more popular among hedge funds. Our overall hedge fund sentiment score for ATRA is 85. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately ATRA wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on ATRA were disappointed as the stock returned -32.2% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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