Turning Point Therapeutics, Inc. (TPTX) Fell Out Of Favor With Hedge Funds

Is Turning Point Therapeutics, Inc. (NASDAQ:TPTX) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Turning Point Therapeutics, Inc. (NASDAQ:TPTX) was in 28 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 33. TPTX has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 33 hedge funds in our database with TPTX positions at the end of the first quarter. Our calculations also showed that TPTX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you’d ask most shareholders, hedge funds are assumed to be slow, old investment vehicles of the past. While there are more than 8000 funds with their doors open today, Our researchers choose to focus on the aristocrats of this club, around 850 funds. It is estimated that this group of investors preside over most of the hedge fund industry’s total capital, and by tailing their matchless stock picks, Insider Monkey has unearthed several investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Aaron Cowen of Suvretta Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. Keeping this in mind let’s view the recent hedge fund action regarding Turning Point Therapeutics, Inc. (NASDAQ:TPTX).

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

Heading into the third quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TPTX over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cormorant Asset Management, managed by Bihua Chen, holds the largest position in Turning Point Therapeutics, Inc. (NASDAQ:TPTX). Cormorant Asset Management has a $237 million position in the stock, comprising 8% of its 13F portfolio. Coming in second is OrbiMed Advisors, which holds a $184.2 million position; the fund has 1.9% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism contain Panayotis Takis Sparaggis’s Alkeon Capital Management, Farallon Capital and Arsani William’s Logos Capital. In terms of the portfolio weights assigned to each position Cormorant Asset Management allocated the biggest weight to Turning Point Therapeutics, Inc. (NASDAQ:TPTX), around 8.05% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, designating 2.64 percent of its 13F equity portfolio to TPTX.

Seeing as Turning Point Therapeutics, Inc. (NASDAQ:TPTX) has experienced bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their entire stakes last quarter. Interestingly, Mitchell Blutt’s Consonance Capital Management dumped the biggest investment of the 750 funds monitored by Insider Monkey, totaling close to $42.6 million in stock. Richard Driehaus’s fund, Driehaus Capital, also sold off its stock, about $19.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Turning Point Therapeutics, Inc. (NASDAQ:TPTX) but similarly valued. We will take a look at Dillard’s, Inc. (NYSE:DDS), The Brink’s Company (NYSE:BCO), Papa John’s International, Inc. (NASDAQ:PZZA), New Jersey Resources Corp (NYSE:NJR), Academy Sports and Outdoors, Inc. (NASDAQ:ASO), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), and iHeartMedia, Inc. (NASDAQ:IHRT). This group of stocks’ market values resemble TPTX’s market value.

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As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $403 million. That figure was $647 million in TPTX’s case. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 12 bullish hedge fund positions. Turning Point Therapeutics, Inc. (NASDAQ:TPTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TPTX is 49.7. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately TPTX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TPTX were disappointed as the stock returned -40% since the end of June (through 10/15) 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.

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

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