Is CCXI Stock A Buy or Sell?

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. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. What do these smart investors think about ChemoCentryx Inc (NASDAQ:CCXI)?

Is CCXI stock a buy? Prominent investors were in a bearish mood. The number of bullish hedge fund positions decreased by 4 in recent months. ChemoCentryx Inc (NASDAQ:CCXI) was in 23 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 31. Our calculations also showed that CCXI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 27 hedge funds in our database with CCXI holdings at the end of September.

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.

Felix Baker of Baker Bros.

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. With all of this in mind let’s take a gander at the new hedge fund action surrounding ChemoCentryx Inc (NASDAQ:CCXI).

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

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in CCXI a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, RA Capital Management was the largest shareholder of ChemoCentryx Inc (NASDAQ:CCXI), with a stake worth $295.8 million reported as of the end of December. Trailing RA Capital Management was Cormorant Asset Management, which amassed a stake valued at $74.3 million. D E Shaw, Baker Bros. Advisors, and Polar 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 Octagon Capital Advisors allocated the biggest weight to ChemoCentryx Inc (NASDAQ:CCXI), around 4.83% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, setting aside 4.13 percent of its 13F equity portfolio to CCXI.

Due to the fact that ChemoCentryx Inc (NASDAQ:CCXI) has faced declining sentiment from hedge fund managers, logic holds that there were a few hedge funds that slashed their entire stakes in the fourth quarter. Intriguingly, Steve Cohen’s Point72 Asset Management dumped the biggest stake of the 750 funds monitored by Insider Monkey, comprising close to $37.2 million in stock. Nathaniel August’s fund, Mangrove Partners, also sold off its stock, about $19.4 million worth. These moves are interesting, as total hedge fund interest was cut by 4 funds in the fourth quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ChemoCentryx Inc (NASDAQ:CCXI) but similarly valued. We will take a look at Altair Engineering Inc. (NASDAQ:ALTR), Valvoline Inc. (NYSE:VVV), The Hanover Insurance Group, Inc. (NYSE:THG), Inari Medical, Inc. (NASDAQ:NARI), MGIC Investment Corporation (NYSE:MTG), Axis Capital Holdings Limited (NYSE:AXS), and Chart Industries, Inc. (NASDAQ:GTLS). This group of stocks’ market caps are closest to CCXI’s market cap.

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As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $378 million. That figure was $617 million in CCXI’s case. Valvoline Inc. (NYSE:VVV) is the most popular stock in this table. On the other hand Altair Engineering Inc. (NASDAQ:ALTR) is the least popular one with only 16 bullish hedge fund positions. ChemoCentryx Inc (NASDAQ:CCXI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CCXI is 55.1. 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. 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 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 beat the market again by 0.9 percentage points. Unfortunately CCXI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on CCXI were disappointed as the stock returned -27.6% since the end of December (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 many of these stocks already outperformed the market since 2019.

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

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