Is PRLD A Good Stock To Buy Now?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Prelude Therapeutics Incorporated (NASDAQ:PRLD).

Is PRLD a good stock to buy now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund bets went up by 15 in recent months. Prelude Therapeutics Incorporated (NASDAQ:PRLD) was in 15 hedge funds’ portfolios at the end of September. Our calculations also showed that PRLD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most traders, hedge funds are viewed as slow, outdated investment tools of yesteryear. While there are more than 8000 funds trading at the moment, Our researchers hone in on the masters of this club, around 850 funds. These money managers watch over the majority of all hedge funds’ total capital, and by following their inimitable picks, Insider Monkey has discovered a number of investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Kris Jenner of Rock Springs Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 take a look at the fresh hedge fund action encompassing Prelude Therapeutics Incorporated (NASDAQ:PRLD).

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

At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PRLD over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, OrbiMed Advisors held the most valuable stake in Prelude Therapeutics Incorporated (NASDAQ:PRLD), which was worth $469.9 million at the end of the third quarter. On the second spot was Baker Bros. Advisors which amassed $304.9 million worth of shares. Hillhouse Capital Management, Rock Springs Capital Management, and Suvretta Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position OrbiMed Advisors allocated the biggest weight to Prelude Therapeutics Incorporated (NASDAQ:PRLD), around 5.94% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, designating 1.22 percent of its 13F equity portfolio to PRLD.

Consequently, key money managers were leading the bulls’ herd. OrbiMed Advisors, initiated the biggest position in Prelude Therapeutics Incorporated (NASDAQ:PRLD). OrbiMed Advisors had $469.9 million invested in the company at the end of the quarter. Julian Baker and Felix Baker’s Baker Bros. Advisors also initiated a $304.9 million position during the quarter. The following funds were also among the new PRLD investors: Lei Zhang’s Hillhouse Capital Management, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, and Aaron Cowen’s Suvretta Capital Management.

Let’s go over hedge fund activity in other stocks similar to Prelude Therapeutics Incorporated (NASDAQ:PRLD). We will take a look at International Bancshares Corp (NASDAQ:IBOC), Walker & Dunlop Inc. (NYSE:WD), Madison Square Garden Entertainment Corp. (NYSE:MSGE), Veoneer, Inc. (NYSE:VNE), Pebblebrook Hotel Trust (NYSE:PEB), Mueller Water Products, Inc. (NYSE:MWA), and Navient Corp (NASDAQ:NAVI). All of these stocks’ market caps match PRLD’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $839 million in PRLD’s case. Madison Square Garden Entertainment Corp. (NYSE:MSGE) is the most popular stock in this table. On the other hand Pebblebrook Hotel Trust (NYSE:PEB) is the least popular one with only 9 bullish hedge fund positions. Prelude Therapeutics Incorporated (NASDAQ:PRLD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PRLD is 29.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on PRLD as the stock returned 141.2% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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