Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Reata Pharmaceuticals, Inc. (NASDAQ:RETA) based on that data.
Reata Pharmaceuticals, Inc. (NASDAQ:RETA) has seen an increase in support from the world’s most elite money managers lately. RETA was in 17 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with RETA positions at the end of the previous quarter. Our calculations also showed that reta isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s check out the recent hedge fund action surrounding Reata Pharmaceuticals, Inc. (NASDAQ:RETA).
What does the smart money think about Reata Pharmaceuticals, Inc. (NASDAQ:RETA)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 89% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards RETA over the last 13 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Point72 Asset Management held the most valuable stake in Reata Pharmaceuticals, Inc. (NASDAQ:RETA), which was worth $61.3 million at the end of the third quarter. On the second spot was Farallon Capital which amassed $55.1 million worth of shares. Moreover, Cormorant Asset Management, Deerfield Management, and Driehaus Capital were also bullish on Reata Pharmaceuticals, Inc. (NASDAQ:RETA), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key money managers were breaking ground themselves. Farallon Capital, managed by Thomas Steyer, established the biggest position in Reata Pharmaceuticals, Inc. (NASDAQ:RETA). Farallon Capital had $55.1 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $15.3 million investment in the stock during the quarter. The other funds with brand new RETA positions are D. E. Shaw’s D E Shaw, Principal Global Investors’s Columbus Circle Investors, and Jim Simons’s Renaissance Technologies.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Reata Pharmaceuticals, Inc. (NASDAQ:RETA) but similarly valued. These stocks are Noah Holdings Limited (NYSE:NOAH), TerraForm Power Inc (NASDAQ:TERP), Washington Real Estate Investment Trust (NYSE:WRE), and WildHorse Resource Development Corporation (NYSE:WRD). This group of stocks’ market valuations resemble RETA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NOAH | 8 | 95172 | -4 |
| TERP | 14 | 219193 | 0 |
| WRE | 8 | 107809 | -1 |
| WRD | 20 | 99480 | -5 |
| Average | 12.5 | 130414 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $242 million in RETA’s case. WildHorse Resource Development Corporation (NYSE:WRD) is the most popular stock in this table. On the other hand Noah Holdings Limited (NYSE:NOAH) is the least popular one with only 8 bullish hedge fund positions. Reata Pharmaceuticals, Inc. (NASDAQ:RETA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WRD might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
