The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 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 September 30th, about a month before the elections. In this article we look at what those investors think of Calithera Biosciences Inc (NASDAQ:CALA).
Is CALA a good stock to buy now? Calithera Biosciences Inc (NASDAQ:CALA) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of September. Our calculations also showed that CALA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). 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 Fiesta Restaurant Group Inc (NASDAQ:FRGI), Evelo Biosciences, Inc. (NASDAQ:EVLO), and HOOKIPA Pharma Inc. (NASDAQ:HOOK) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steven Cohen of Point72 Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. 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. With all of this in mind let’s take a gander at the key hedge fund action encompassing Calithera Biosciences Inc (NASDAQ:CALA).
Do Hedge Funds Think CALA Is A Good Stock To Buy Now?
At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CALA over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of Calithera Biosciences Inc (NASDAQ:CALA), with a stake worth $15.8 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Point72 Asset Management, which amassed a stake valued at $12.9 million. Great Point Partners, Renaissance Technologies, and Two Sigma Advisors 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 Great Point Partners allocated the biggest weight to Calithera Biosciences Inc (NASDAQ:CALA), around 0.91% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, setting aside 0.86 percent of its 13F equity portfolio to CALA.
Judging by the fact that Calithera Biosciences Inc (NASDAQ:CALA) has witnessed bearish sentiment from the smart money, logic holds that there is a sect of money managers that elected to cut their entire stakes last quarter. Intriguingly, Greg Eisner’s Engineers Gate Manager dropped the largest position of the 750 funds watched by Insider Monkey, totaling an estimated $0.1 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Calithera Biosciences Inc (NASDAQ:CALA) but similarly valued. We will take a look at Fiesta Restaurant Group Inc (NASDAQ:FRGI), Evelo Biosciences, Inc. (NASDAQ:EVLO), HOOKIPA Pharma Inc. (NASDAQ:HOOK), Rimini Street, Inc. (NASDAQ:RMNI), NextCure, Inc. (NASDAQ:NXTC), Fidus Investment Corp (NASDAQ:FDUS), and ProQR Therapeutics NV (NASDAQ:PRQR). This group of stocks’ market caps are closest to CALA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRGI | 14 | 100160 | 0 |
| EVLO | 3 | 7804 | -3 |
| HOOK | 7 | 34432 | -2 |
| RMNI | 9 | 99016 | 1 |
| NXTC | 13 | 54862 | -3 |
| FDUS | 5 | 6368 | 1 |
| PRQR | 5 | 39417 | -2 |
| Average | 8 | 48866 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $47 million in CALA’s case. Fiesta Restaurant Group Inc (NASDAQ:FRGI) is the most popular stock in this table. On the other hand Evelo Biosciences, Inc. (NASDAQ:EVLO) is the least popular one with only 3 bullish hedge fund positions. Calithera Biosciences Inc (NASDAQ:CALA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CALA is 83. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on CALA as the stock returned 40% since the end of Q3 (through 12/8) 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.
