In this article we will take a look at whether hedge funds think Natera Inc (NASDAQ:NTRA) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Natera Inc (NASDAQ:NTRA) has experienced an increase in hedge fund sentiment lately. Natera Inc (NASDAQ:NTRA) was in 52 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 46. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. There were 41 hedge funds in our database with NTRA positions at the end of the first quarter. Our calculations also showed that NTRA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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 take a look at the new hedge fund action encompassing Natera Inc (NASDAQ:NTRA).
Do Hedge Funds Think NTRA Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NTRA 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.
The largest stake in Natera Inc (NASDAQ:NTRA) was held by OrbiMed Advisors, which reported holding $233.6 million worth of stock at the end of June. It was followed by Millennium Management with a $217.1 million position. Other investors bullish on the company included Marshall Wace LLP, Holocene Advisors, and OZ Management. In terms of the portfolio weights assigned to each position Foresite Capital allocated the biggest weight to Natera Inc (NASDAQ:NTRA), around 15.32% of its 13F portfolio. Hudson Executive Capital is also relatively very bullish on the stock, setting aside 4.44 percent of its 13F equity portfolio to NTRA.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Natera Inc (NASDAQ:NTRA) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the most valuable position in Natera Inc (NASDAQ:NTRA). Marshall Wace LLP had $144 million invested in the company at the end of the quarter. Daniel S. Och’s OZ Management also initiated a $131.9 million position during the quarter. The other funds with new positions in the stock are Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Farallon Capital, and Aaron Cowen’s Suvretta Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Natera Inc (NASDAQ:NTRA) but similarly valued. We will take a look at Banco de Chile (NYSE:BCH), Dolby Laboratories, Inc. (NYSE:DLB), Comerica Incorporated (NYSE:CMA), Beyond Meat, Inc. (NASDAQ:BYND), DXC Technology Company (NYSE:DXC), Formula One Group (NASDAQ:FWONA), and Amdocs Limited (NYSE:DOX). This group of stocks’ market values are similar to NTRA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BCH | 7 | 45933 | 2 |
| DLB | 31 | 748482 | -3 |
| CMA | 33 | 547103 | 1 |
| BYND | 17 | 170584 | -9 |
| DXC | 30 | 851210 | 2 |
| FWONA | 22 | 300534 | 3 |
| DOX | 29 | 796947 | -3 |
| Average | 24.1 | 494399 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $494 million. That figure was $1896 million in NTRA’s case. Comerica Incorporated (NYSE:CMA) is the most popular stock in this table. On the other hand Banco de Chile (NYSE:BCH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Natera Inc (NASDAQ:NTRA) is more popular among hedge funds. Our overall hedge fund sentiment score for NTRA is 90. 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 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Unfortunately NTRA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NTRA were disappointed as the stock returned 2.1% since the end of the second quarter (through 11/5) 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 most of these stocks already outperformed the market since 2019.
Follow Natera Inc. (NASDAQ:NTRA)
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Disclosure: None. This article was originally published at Insider Monkey.
