Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Nektar Therapeutics (NASDAQ:NKTR).
Nektar Therapeutics (NASDAQ:NKTR) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. Nektar Therapeutics (NASDAQ:NKTR) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 27. Our calculations also showed that NKTR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Henrik Rhenman of Rhenman & Partners Asset Management
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 we’re going to view the new hedge fund action regarding Nektar Therapeutics (NASDAQ:NKTR).
Do Hedge Funds Think NKTR Is A Good Stock To Buy Now?
At the end of September, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in NKTR a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Nektar Therapeutics (NASDAQ:NKTR) was held by Maverick Capital, which reported holding $104.9 million worth of stock at the end of September. It was followed by Camber Capital Management with a $67.4 million position. Other investors bullish on the company included Duquesne Capital, Rhenman & Partners Asset Management, and Millennium Management. In terms of the portfolio weights assigned to each position Great Point Partners allocated the biggest weight to Nektar Therapeutics (NASDAQ:NKTR), around 2.11% of its 13F portfolio. Camber Capital Management is also relatively very bullish on the stock, earmarking 2.07 percent of its 13F equity portfolio to NKTR.
As aggregate interest increased, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, established the biggest position in Nektar Therapeutics (NASDAQ:NKTR). Point72 Asset Management had $9.5 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin’s Great Point Partners also initiated a $9.1 million position during the quarter. The other funds with new positions in the stock are Efrem Kamen’s Pura Vida Investments, Efrem Kamen’s Pura Vida Investments, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Nektar Therapeutics (NASDAQ:NKTR) but similarly valued. These stocks are Shake Shack Inc (NYSE:SHAK), M.D.C. Holdings, Inc. (NYSE:MDC), Veracyte Inc (NASDAQ:VCYT), Steven Madden, Ltd. (NASDAQ:SHOO), Evertec Inc (NYSE:EVTC), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), and Turning Point Therapeutics, Inc. (NASDAQ:TPTX). All of these stocks’ market caps match NKTR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHAK | 25 | 284891 | 5 |
| MDC | 18 | 32800 | -4 |
| VCYT | 21 | 455716 | -1 |
| SHOO | 23 | 195874 | 5 |
| EVTC | 17 | 189912 | -3 |
| CBRL | 21 | 107435 | -7 |
| TPTX | 21 | 449761 | -7 |
| Average | 20.9 | 245198 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $272 million in NKTR’s case. Shake Shack Inc (NYSE:SHAK) is the most popular stock in this table. On the other hand Evertec Inc (NYSE:EVTC) is the least popular one with only 17 bullish hedge fund positions. Nektar Therapeutics (NASDAQ:NKTR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NKTR is 70.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 beat the market again by 5.1 percentage points. Unfortunately NKTR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NKTR were disappointed as the stock returned -30.8% since the end of September (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 many of these stocks already outperformed the market since 2019.
Follow Nektar Therapeutics (NASDAQ:NKTR)
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Disclosure: None. This article was originally published at Insider Monkey.
