How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Kite Pharma Inc (NASDAQ:KITE).
Hedge fund interest in Kite Pharma Inc (NASDAQ:KITE) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare KITE to other stocks including Puma Biotechnology Inc (NYSE:PBYI), United Natural Foods, Inc. (NASDAQ:UNFI), and Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) to get a better sense of its popularity.
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Keeping this in mind, let’s take a gander at the new action encompassing Kite Pharma Inc (NASDAQ:KITE).
What does the smart money think about Kite Pharma Inc (NASDAQ:KITE)?
Heading into Q4, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second 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 upping their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the number one position in Kite Pharma Inc (NASDAQ:KITE). Viking Global has a $137.7 million position in the stock, comprising 0.5% of its 13F portfolio. The second largest stake is held by Wildcat Capital Management, managed by Leonard A. Potter, which holds a $131.3 million position; the fund has 49% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Christopher James’s Partner Fund Management, Oleg Nodelman’s EcoR1 Capital and Guy Shahar’s DSAM Partners.
Intriguingly, David Lamond’s Lamond Capital Partners dumped the biggest position of all the hedgies followed by Insider Monkey, comprising close to $6.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund said goodbye to about $1.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Kite Pharma Inc (NASDAQ:KITE) but similarly valued. We will take a look at Puma Biotechnology Inc (NYSE:PBYI), United Natural Foods, Inc. (NASDAQ:UNFI), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), and Tech Data Corp (NASDAQ:TECD). This group of stocks’ market values resemble KITE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PBYI | 18 | 759975 | -11 |
| UNFI | 16 | 200869 | 1 |
| SBGI | 31 | 529314 | -1 |
| TECD | 25 | 195273 | 5 |
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $421 million. That figure was $384 million in KITE’s case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand United Natural Foods, Inc. (NASDAQ:UNFI) is the least popular one with only 16 bullish hedge fund positions. Kite Pharma Inc (NASDAQ:KITE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SBGI might be a better candidate to consider a long position.
