Travere Therapeutics, Inc. (TVTX) Fell Out Of Favor With Hedge Funds?

We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Travere Therapeutics, Inc. (NASDAQ:TVTX) based on that data.

Travere Therapeutics, Inc. (NASDAQ:TVTX) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 25 hedge funds’ portfolios at the end of September. Our calculations also showed that TVTX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Prelude Therapeutics Incorporated (NASDAQ:PRLD), GrowGeneration Corp. (NASDAQ:GRWG), and Day One Biopharmaceuticals Inc. (NASDAQ:DAWN) to gather more data points.

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 take a look at the key hedge fund action regarding Travere Therapeutics, Inc. (NASDAQ:TVTX).

Joseph Edelman of Perceptive Advisors

Do Hedge Funds Think TVTX Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards TVTX over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

More specifically, RA Capital Management was the largest shareholder of Travere Therapeutics, Inc. (NASDAQ:TVTX), with a stake worth $136.2 million reported as of the end of September. Trailing RA Capital Management was Armistice Capital, which amassed a stake valued at $115.1 million. Baker Bros. Advisors, Perceptive Advisors, and Adage Capital 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 Great Point Partners allocated the biggest weight to Travere Therapeutics, Inc. (NASDAQ:TVTX), around 3.53% of its 13F portfolio. Armistice Capital is also relatively very bullish on the stock, earmarking 1.95 percent of its 13F equity portfolio to TVTX.

Because Travere Therapeutics, Inc. (NASDAQ:TVTX) has faced declining sentiment from the smart money, we can see that there were a few money managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, Michael Castor’s Sio Capital dumped the largest position of the 750 funds followed by Insider Monkey, worth about $2.2 million in stock, and Mika Toikka’s AlphaCrest Capital Management was right behind this move, as the fund dumped about $0.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Travere Therapeutics, Inc. (NASDAQ:TVTX). These stocks are Prelude Therapeutics Incorporated (NASDAQ:PRLD), GrowGeneration Corp. (NASDAQ:GRWG), Day One Biopharmaceuticals Inc. (NASDAQ:DAWN), Kraton Corporation (NYSE:KRA), Malibu Boats Inc (NASDAQ:MBUU), Redwood Trust, Inc. (NYSE:RWT), and Hyliion Holdings Corp. (NYSE:HYLN). This group of stocks’ market valuations resemble TVTX’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $568 million in TVTX’s case. Kraton Corporation (NYSE:KRA) is the most popular stock in this table. On the other hand Prelude Therapeutics Incorporated (NASDAQ:PRLD) is the least popular one with only 7 bullish hedge fund positions. Travere Therapeutics, Inc. (NASDAQ:TVTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TVTX is 82.8. 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. Hedge funds were also right about betting on TVTX as the stock returned 15% since the end of Q3 (through 12/9) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.