Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Sutro Biopharma, Inc. (NASDAQ:STRO) changed recently.
Sutro Biopharma, Inc. (NASDAQ:STRO) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. STRO investors should pay attention to a decrease in hedge fund sentiment lately. There were 26 hedge funds in our database with STRO positions at the end of the second quarter. Our calculations also showed that STRO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s analyze the recent hedge fund action regarding Sutro Biopharma, Inc. (NASDAQ:STRO).
Do Hedge Funds Think STRO Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards STRO over the last 25 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Suvretta Capital Management was the largest shareholder of Sutro Biopharma, Inc. (NASDAQ:STRO), with a stake worth $42.2 million reported as of the end of September. Trailing Suvretta Capital Management was Samsara BioCapital, which amassed a stake valued at $31.7 million. Holocene Advisors, Frazier Healthcare Partners, and Biotechnology Value Fund / BVF Inc 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 Samsara BioCapital allocated the biggest weight to Sutro Biopharma, Inc. (NASDAQ:STRO), around 4.97% of its 13F portfolio. Frazier Healthcare Partners is also relatively very bullish on the stock, earmarking 2.22 percent of its 13F equity portfolio to STRO.
Seeing as Sutro Biopharma, Inc. (NASDAQ:STRO) has experienced falling interest from the aggregate hedge fund industry, we can see that there exists a select few fund managers that elected to cut their full holdings in the third quarter. Interestingly, OrbiMed Advisors dumped the biggest position of the 750 funds followed by Insider Monkey, totaling about $8.1 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also dumped its stock, about $2.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Sutro Biopharma, Inc. (NASDAQ:STRO). These stocks are Heidrick & Struggles International, Inc. (NASDAQ:HSII), Navios Maritime Partners L.P. (NYSE:NMM), Clarus Corporation (NASDAQ:CLAR), EVINE Live Inc (NASDAQ:EVLV), OppFi Inc. (NYSE:OPFI), Piedmont Lithium Inc. (NASDAQ:PLL), and Omeros Corporation (NASDAQ:OMER). This group of stocks’ market values are similar to STRO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HSII | 15 | 140384 | 0 |
| NMM | 9 | 38771 | 1 |
| CLAR | 16 | 83566 | -1 |
| EVLV | 18 | 103960 | 18 |
| OPFI | 11 | 12841 | 11 |
| PLL | 6 | 16935 | -2 |
| OMER | 10 | 55214 | -1 |
| Average | 12.1 | 64524 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $214 million in STRO’s case. EVINE Live Inc (NASDAQ:EVLV) is the most popular stock in this table. On the other hand Piedmont Lithium Inc. (NASDAQ:PLL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Sutro Biopharma, Inc. (NASDAQ:STRO) is more popular among hedge funds. Our overall hedge fund sentiment score for STRO is 72.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately STRO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STRO were disappointed as the stock returned -21.7% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Sutro Biopharma Inc. (NASDAQ:STRO)
Follow Sutro Biopharma Inc. (NASDAQ:STRO)
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Disclosure: None. This article was originally published at Insider Monkey.
