Based on the fact that hedge funds have collectively under-performed the market for several years, it would be easy to assume that their stock picks simply aren’t very good. However, our research shows this not to be the case. In fact, when it comes to their very top picks collectively, they show a strong ability to pick winning stocks. Between November 1, 2014 and October 30 of this year, less than 49% of the stocks in the S&P 500 beat the market. However, hedge funds’ top 30 stock picks from the index had a much higher success rate than this, at 63%. The returns from these 30 stocks also easily bested the broader market, at 9.5% compared to 5.2%, despite there being a few duds in there like Micron and Anadarko (even their collective wisdom isn’t perfect). The results show that there is plenty of merit to imitating the collective wisdom of top investors.
Is CymaBay Therapeutics Inc (NASDAQ:CBAY) the right investment to pursue these days? The best stock pickers are taking an optimistic view. The number of long hedge fund positions improved by 2 lately. CymaBay Therapeutics Inc (NASDAQ:CBAY) was in 10 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with CymaBay Therapeutics Inc (NASDAQ:CBAY) holdings at the end of the previous quarter. At the end of this article, we will also compare CymaBay Therapeutics Inc (NASDAQ:CBAY) to other stocks, including The Female Health Company (NASDAQ:FHCO), Zhone Technologies Inc (NASDAQ:ZHNE), and Fuel Tech Inc. (NASDAQ:FTEK) to get a better sense of its popularity.
Follow Cymabay Therapeutics Inc. (NASDAQ:CBAY)
Follow Cymabay Therapeutics Inc. (NASDAQ:CBAY)
According to most investors, hedge funds are seen as worthless, outdated financial tools of the past. While there are over 8000 funds in operation at present, we hone in on the bigwigs of this group, around 700 funds. Most estimates calculate that this group of people directs the majority of the hedge fund industry’s total capital, and by following their best stock picks, Insider Monkey has determined several investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s take a glance at the fresh action encompassing CymaBay Therapeutics Inc (NASDAQ:CBAY).
What have hedge funds been doing with CymaBay Therapeutics Inc (NASDAQ:CBAY)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 25% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in CymaBay Therapeutics Inc (NASDAQ:CBAY). Adage Capital Management has a $3.3 million position in the stock, comprising less than 0.1% of its 13F portfolio. On Adage Capital Management’s heels is Steve Cohen of Point72 Asset Management, with a $2 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Mark Kingdon’s Kingdon Capital, Steven Boyd’s Armistice Capital, and Ken Greenberg and David Kim’s Ghost Tree Capital.
As aggregate interest increased, specific money managers have jumped into CymaBay Therapeutics Inc (NASDAQ:CBAY) headfirst. Kingdon Capital assembled the largest position in CymaBay Therapeutics Inc (NASDAQ:CBAY). Kingdon Capital had $1.8 million invested in the company at the end of the quarter. Armistice Capital also made a $1.6 million investment in the stock during the quarter. The only other fund with a new position in the stock is Ghost Tree Capital.
Let’s now take a look at hedge fund activity in other stocks similar to CymaBay Therapeutics Inc (NASDAQ:CBAY). We will take a look at The Female Health Company (NASDAQ:FHCO), Zhone Technologies Inc (NASDAQ:ZHNE), Fuel Tech Inc. (NASDAQ:FTEK), and Stanley Furniture Co. (NASDAQ:STLY). This group of stocks’ market valuations is similar to CymaBay Therapeutics Inc (NASDAQ:CBAY)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FHCO | 4 | 4361 | -5 |
| ZHNE | 4 | 474 | 0 |
| FTEK | 4 | 1782 | 0 |
| STLY | 4 | 12112 | 0 |
As you can see, these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $12 million in CymaBay Therapeutics Inc (NASDAQ:CBAY)’s case. The Female Health Company (NASDAQ:FHCO) is the most popular stock in this table. On the other hand, The Female Health Company (NASDAQ:FHCO) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks, CymaBay Therapeutics Inc (NASDAQ:CBAY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
