Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Karyopharm Therapeutics Inc (NASDAQ:KPTI) to find out whether there were any major changes in hedge funds’ views.
Karyopharm Therapeutics Inc (NASDAQ:KPTI) investors should be aware of an increase in hedge fund sentiment in recent months. Karyopharm Therapeutics Inc (NASDAQ:KPTI) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 24. There were 19 hedge funds in our database with KPTI positions at the end of the fourth quarter. Our calculations also showed that KPTI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. 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 homepage. With all of this in mind we’re going to check out the key hedge fund action encompassing Karyopharm Therapeutics Inc (NASDAQ:KPTI).
Do Hedge Funds Think KPTI Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in KPTI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Karyopharm Therapeutics Inc (NASDAQ:KPTI) was held by Palo Alto Investors, which reported holding $56.4 million worth of stock at the end of December. It was followed by Alkeon Capital Management with a $28.1 million position. Other investors bullish on the company included Adage Capital Management, Laurion Capital Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to Karyopharm Therapeutics Inc (NASDAQ:KPTI), around 3.21% of its 13F portfolio. Birchview Capital is also relatively very bullish on the stock, dishing out 1.44 percent of its 13F equity portfolio to KPTI.
As industrywide interest jumped, specific money managers have been driving this bullishness. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), created the most outsized position in Karyopharm Therapeutics Inc (NASDAQ:KPTI). Schonfeld Strategic Advisors had $1.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also initiated a $0.9 million position during the quarter. The following funds were also among the new KPTI investors: Peter Muller’s PDT Partners, Michael Gelband’s ExodusPoint Capital, and Jinghua Yan’s TwinBeech Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Karyopharm Therapeutics Inc (NASDAQ:KPTI) but similarly valued. These stocks are Esperion Therapeutics (NASDAQ:ESPR), Endeavour Silver Corp. (NYSE:EXK), HEXO Corp. (NYSE:HEXO), Bluegreen Vacations Corporation (NYSE:BXG), Trueblue Inc (NYSE:TBI), ATN International, Inc. (NASDAQ:ATNI), and Cincinnati Bell Inc. (NYSE:CBB). This group of stocks’ market caps match KPTI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESPR | 17 | 118866 | 1 |
| EXK | 10 | 9024 | 0 |
| HEXO | 6 | 8026 | 2 |
| BXG | 3 | 2353 | 0 |
| TBI | 12 | 83253 | -4 |
| ATNI | 6 | 46821 | -2 |
| CBB | 12 | 121161 | -2 |
| Average | 9.4 | 55643 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $146 million in KPTI’s case. Esperion Therapeutics (NASDAQ:ESPR) is the most popular stock in this table. On the other hand Bluegreen Vacations Corporation (NYSE:BXG) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Karyopharm Therapeutics Inc (NASDAQ:KPTI) is more popular among hedge funds. Our overall hedge fund sentiment score for KPTI is 83.3. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately KPTI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KPTI were disappointed as the stock returned -12.1% since the end of the first quarter (through 7/16) 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 Karyopharm Therapeutics Inc. (NASDAQ:KPTI)
Follow Karyopharm Therapeutics Inc. (NASDAQ:KPTI)
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Disclosure: None. This article was originally published at Insider Monkey.
