Is FDMT Stock A Buy or Sell?

Is 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is FDMT stock a buy? The smart money was buying. The number of bullish hedge fund positions went up by 24 lately. 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) was in 24 hedge funds’ portfolios at the end of December. Our calculations also showed that FDMT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was 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). So you can still find a lot of gems by following hedge funds’ moves today.

Andreas Halvorsen of Viking Global

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. Now we’re going to check out the new hedge fund action surrounding 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT).

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

At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FDMT over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the largest position in 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT). Viking Global has a $163.2 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, which holds a $45.8 million position; 1.8% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish encompass Eli Casdin’s Casdin Capital, Masayoshi Son’s SB Management and Joseph Edelman’s Perceptive Advisors. In terms of the portfolio weights assigned to each position Octagon Capital Advisors allocated the biggest weight to 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT), around 5.43% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, earmarking 1.8 percent of its 13F equity portfolio to FDMT.

Consequently, key hedge funds have been driving this bullishness. Viking Global, managed by Andreas Halvorsen, initiated the most valuable position in 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT). Viking Global had $163.2 million invested in the company at the end of the quarter. Mark Lampert’s Biotechnology Value Fund / BVF Inc also made a $45.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Eli Casdin’s Casdin Capital, Masayoshi Son’s SB Management, and Joseph Edelman’s Perceptive Advisors.

Let’s also examine hedge fund activity in other stocks similar to 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT). These stocks are City Holding Company (NASDAQ:CHCO), Groupon Inc (NASDAQ:GRPN), Warrior Met Coal Inc. (NYSE:HCC), Enterprise Financial Services Corp (NASDAQ:EFSC), ArcBest Corp (NASDAQ:ARCB), National Research Corporation (NASDAQ:NRC), and Ontrak, Inc. (NASDAQ:OTRK). This group of stocks’ market caps are similar to FDMT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $390 million in FDMT’s case. Groupon Inc (NASDAQ:GRPN) is the most popular stock in this table. On the other hand City Holding Company (NASDAQ:CHCO) is the least popular one with only 6 bullish hedge fund positions. 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FDMT is 82. 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 FDMT wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FDMT were disappointed as the stock returned -20.4% 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.

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

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