Is CNST 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 Constellation Pharmaceuticals, Inc. (NASDAQ:CNST) based on those filings.

Is CNST stock a buy? Hedge funds were turning bullish. The number of long hedge fund positions advanced by 9 recently. Constellation Pharmaceuticals, Inc. (NASDAQ:CNST) was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CNST isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 26 hedge funds in our database with CNST holdings at the end of September.

At the moment there are many formulas investors use to size up their holdings. A pair of the less known formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite fund managers can outclass the market by a significant margin (see the details here).

Peter Kolchinsky of RA Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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 we’re going to take a look at the recent hedge fund action regarding Constellation Pharmaceuticals, Inc. (NASDAQ:CNST).

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

At the end of December, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in CNST a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Constellation Pharmaceuticals, Inc. (NASDAQ:CNST) was held by Avoro Capital Advisors (venBio Select Advisor), which reported holding $85 million worth of stock at the end of December. It was followed by RA Capital Management with a $53.4 million position. Other investors bullish on the company included Casdin Capital, Deerfield Management, and Great Point Partners. In terms of the portfolio weights assigned to each position Commodore Capital allocated the biggest weight to Constellation Pharmaceuticals, Inc. (NASDAQ:CNST), around 6.63% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, earmarking 4.79 percent of its 13F equity portfolio to CNST.

Consequently, some big names were leading the bulls’ herd. RA Capital Management, managed by Peter Kolchinsky, created the most outsized position in Constellation Pharmaceuticals, Inc. (NASDAQ:CNST). RA Capital Management had $53.4 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also initiated a $28.8 million position during the quarter. The following funds were also among the new CNST investors: Farallon Capital, Jim Simons’s Euclidean Capital, and Egen Atkinson and Michael Kramarz’s Commodore Capital.

Let’s now review hedge fund activity in other stocks similar to Constellation Pharmaceuticals, Inc. (NASDAQ:CNST). We will take a look at Translate Bio, Inc. (NASDAQ:TBIO), GreenTree Hospitality Group Ltd. (NYSE:GHG), TriMas Corp (NASDAQ:TRS), Vaxcyte, Inc. (NASDAQ:PCVX), Enerpac Tool Group Corp. (NYSE:EPAC), Upland Software Inc (NASDAQ:UPLD), and Vocera Communications Inc (NYSE:VCRA). This group of stocks’ market valuations are similar to CNST’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $439 million in CNST’s case. Upland Software Inc (NASDAQ:UPLD) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Constellation Pharmaceuticals, Inc. (NASDAQ:CNST) is more popular among hedge funds. Our overall hedge fund sentiment score for CNST is 90. 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 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately CNST wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on CNST were disappointed as the stock returned -19.4% since the end of the fourth quarter (through 4/1) 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.