Is Mirati Therapeutics, Inc. (MRTX) Going to Burn These Hedge Funds?

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 successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Mirati Therapeutics, Inc. (NASDAQ:MRTX) .

Is Mirati Therapeutics, Inc. (NASDAQ:MRTX) the right investment to pursue these days? The smart money is surely becoming more confident. The number of bullish hedge fund positions grew by 3 recently. MRTX was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with MRTX holdings at the end of the previous quarter. At the end of this article we will also compare MRTX to other stocks including Core Molding Technologies, Inc. (NYSEAMEX:CMT), DHX Media Ltd (USA) (NASDAQ:DHXM), and Corindus Vascular Robotics Inc (NYSEMKT:CVRS) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Hedge fund activity in Mirati Therapeutics, Inc. (NASDAQ:MRTX)

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 30% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards MRTX over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baker Bros. Advisors, led by Julian Baker and Felix Baker, holds the number one position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). Baker Bros. Advisors has a $15 million position in the stock. The second most bullish fund manager is venBio Select Advisor, led by Behzad Aghazadeh, which holds a $9.8 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of Kevin Kotler’s Broadfin Capital, Ken Greenberg and David Kim’s Ghost Tree Capital and Jeffrey Jay and David Kroin’s Great Point 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, specific money managers were leading the bulls’ herd. Great Point Partners, led by Jeffrey Jay and David Kroin, assembled the most outsized position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). Great Point Partners had $1.5 million invested in the company at the end of the quarter. Hal Mintz’s Sabby Capital also initiated a $0.7 million position during the quarter. The other funds with new positions in the stock are Cliff Asness’ AQR Capital Management, D. E. Shaw’s D E Shaw, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Mirati Therapeutics, Inc. (NASDAQ:MRTX). We will take a look at Core Molding Technologies, Inc. (NYSEAMEX:CMT), DHX Media Ltd (USA) (NASDAQ:DHXM), Corindus Vascular Robotics Inc (NYSEMKT:CVRS), and Kona Grill Inc (NASDAQ:KONA). All of these stocks’ market caps match MRTX’s market cap.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $37 million in MRTX’s case. Core Molding Technologies, Inc. (NYSEAMEX:CMT) is the most popular stock in this table. On the other hand Corindus Vascular Robotics Inc (NYSEMKT:CVRS) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Mirati Therapeutics, Inc. (NASDAQ:MRTX) 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.

Disclosure: None