After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Black Diamond Therapeutics, Inc. (NASDAQ:BDTX).
IS BDTX a good stock to buy? Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) has seen a decrease in hedge fund interest in recent months. Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 18. Our calculations also showed that BDTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
James E. Flynn of Deerfield Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. With all of this in mind let’s view the latest hedge fund action encompassing Black Diamond Therapeutics, Inc. (NASDAQ:BDTX).
Do Hedge Funds Think BDTX Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in BDTX over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RA Capital Management was the largest shareholder of Black Diamond Therapeutics, Inc. (NASDAQ:BDTX), with a stake worth $62.8 million reported as of the end of March. Trailing RA Capital Management was Deerfield Management, which amassed a stake valued at $25.4 million. Polar Capital, Avoro Capital Advisors (venBio Select Advisor), and Driehaus Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Burrage Capital Management allocated the biggest weight to Black Diamond Therapeutics, Inc. (NASDAQ:BDTX), around 2.17% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, designating 0.95 percent of its 13F equity portfolio to BDTX.
Since Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) has witnessed a decline in interest from the aggregate hedge fund industry, logic holds that there exists a select few funds that slashed their entire stakes in the first quarter. Intriguingly, Steve Cohen’s Point72 Asset Management dumped the largest stake of the 750 funds followed by Insider Monkey, worth close to $19.4 million in stock, and Eli Casdin’s Casdin Capital was right behind this move, as the fund dropped about $9.3 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) but similarly valued. These stocks are Tenneco Inc (NYSE:TEN), Chuy’s Holdings Inc (NASDAQ:CHUY), Cars.com Inc. (NYSE:CARS), Shoe Carnival, Inc. (NASDAQ:SCVL), United Fire Group, Inc. (NASDAQ:UFCS), Village Farms International, Inc. (NASDAQ:VFF), and Mohawk Group Holdings, Inc. (NASDAQ:MWK). This group of stocks’ market values are closest to BDTX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEN | 28 | 196401 | 3 |
| CHUY | 8 | 54348 | -5 |
| CARS | 18 | 154447 | -1 |
| SCVL | 11 | 72384 | 0 |
| UFCS | 5 | 22792 | -1 |
| VFF | 8 | 35566 | 2 |
| MWK | 12 | 70338 | 3 |
| Average | 12.9 | 86611 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.9 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $141 million in BDTX’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand United Fire Group, Inc. (NASDAQ:UFCS) is the least popular one with only 5 bullish hedge fund positions. Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BDTX is 58.4. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately BDTX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BDTX were disappointed as the stock returned -61.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Black Diamond Therapeutics Inc. (NASDAQ:BDTX)
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Disclosure: None. This article was originally published at Insider Monkey.
