There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Kite Pharma Inc (NASDAQ:KITE).
Kite Pharma Inc (NASDAQ:KITE) investors should be aware of an increase in hedge fund sentiment in recent months. KITE was in 27 hedge funds’ portfolios at the end of September. There were 19 hedge funds in our database with KITE positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cree, Inc. (NASDAQ:CREE), Darling International Inc. (NYSE:DAR), and The Timken Company (NYSE:TKR) to gather more data points.
Follow Kite Pharma Inc. (NASDAQ:KITE)
Follow Kite Pharma Inc. (NASDAQ:KITE)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How are hedge funds trading Kite Pharma Inc (NASDAQ:KITE)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 42% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Wildcat Capital Management, managed by Leonard A. Potter, holds the largest position in Kite Pharma Inc (NASDAQ:KITE). Wildcat Capital Management has a $131.7 million position in the stock, comprising 31.5% of its 13F portfolio. The second most bullish fund manager is Andreas Halvorsen of Viking Global, with a $28.9 million position. Other professional money managers that hold long positions comprise Jacob Doft’s Highline Capital Management, Christopher James’ Partner Fund Management and Guy Shahar’s DSAM Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Highline Capital Management established the biggest position in Kite Pharma Inc (NASDAQ:KITE). Highline Capital Management had $28.2 million invested in the company at the end of the quarter. Millennium Management, one of the 10 largest hedge funds in the world, also made a $8.9 million investment in the stock during the quarter. The other funds with brand new KITE positions are Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Sander Gerber’s Hudson Bay Capital Management, and Ken Greenberg and David Kim’s Ghost Tree Capital.
Let’s also examine hedge fund activity in other stocks similar to Kite Pharma Inc (NASDAQ:KITE). These stocks are Cree, Inc. (NASDAQ:CREE), Darling International Inc. (NYSE:DAR), The Timken Company (NYSE:TKR), and Mack Cali Realty Corp (NYSE:CLI). All of these stocks’ market caps resemble KITE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CREE | 12 | 45363 | 1 |
| DAR | 24 | 291374 | -6 |
| TKR | 27 | 136824 | 1 |
| CLI | 10 | 114408 | -2 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $294 million in KITE’s case. The Timken Company (NYSE:TKR) is the most popular stock in this table. On the other hand Mack Cali Realty Corp (NYSE:CLI) is the least popular one with only 10 bullish hedge fund positions. Kite Pharma Inc (NASDAQ:KITE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TKR might be a better candidate to consider a long position.
Disclosure: None
