We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Precision BioSciences, Inc. (NASDAQ:DTIL).
Precision BioSciences, Inc. (NASDAQ:DTIL) has experienced an increase in hedge fund interest recently. DTIL was in 13 hedge funds’ portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with DTIL positions at the end of the previous quarter. Our calculations also showed that DTIL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at present, Our researchers look at the top tier of this club, about 750 funds. These investment experts administer most of the hedge fund industry’s total asset base, and by tailing their matchless stock picks, Insider Monkey has discovered a few investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Peter Kolchinsky of RA Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s go over the key hedge fund action encompassing Precision BioSciences, Inc. (NASDAQ:DTIL).
What have hedge funds been doing with Precision BioSciences, Inc. (NASDAQ:DTIL)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 44% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DTIL over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RA Capital Management was the largest shareholder of Precision BioSciences, Inc. (NASDAQ:DTIL), with a stake worth $15.5 million reported as of the end of September. Trailing RA Capital Management was Adage Capital Management, which amassed a stake valued at $7.6 million. DSAM Partners, Laurion Capital Management, and Cormorant Asset 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 DSAM Partners allocated the biggest weight to Precision BioSciences, Inc. (NASDAQ:DTIL), around 0.93% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, setting aside 0.92 percent of its 13F equity portfolio to DTIL.
Consequently, specific money managers have jumped into Precision BioSciences, Inc. (NASDAQ:DTIL) headfirst. ExodusPoint Capital, managed by Michael Gelband, initiated the biggest position in Precision BioSciences, Inc. (NASDAQ:DTIL). ExodusPoint Capital had $0.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter. The following funds were also among the new DTIL investors: David E. Shaw’s D E Shaw, Paul Marshall and Ian Wace’s Marshall Wace, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Precision BioSciences, Inc. (NASDAQ:DTIL) but similarly valued. These stocks are Resolute Forest Products Inc (NYSE:RFP), Community Health Systems, Inc. (NYSE:CYH), PDF Solutions, Inc. (NASDAQ:PDFS), and Clean Energy Fuels Corp (NASDAQ:CLNE). This group of stocks’ market values are similar to DTIL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RFP | 16 | 186530 | -1 |
| CYH | 19 | 64369 | 6 |
| PDFS | 11 | 22936 | 3 |
| CLNE | 10 | 22186 | 2 |
| Average | 14 | 74005 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $40 million in DTIL’s case. Community Health Systems, Inc. (NYSE:CYH) is the most popular stock in this table. On the other hand Clean Energy Fuels Corp (NASDAQ:CLNE) is the least popular one with only 10 bullish hedge fund positions. Precision BioSciences, Inc. (NASDAQ:DTIL) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on DTIL as the stock returned 111.8% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
