Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles 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 over the last 6 years and analyze what the smart money thinks of Cara Therapeutics Inc (NASDAQ:CARA) based on that data.
Cara Therapeutics Inc (NASDAQ:CARA) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. CARA investors should be aware of an increase in activity from the world’s largest hedge funds lately. There were 15 hedge funds in our database with CARA holdings at the end of December. Our calculations also showed that CARA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Mark Kingdon of Kingdon Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we’re going to take a glance at the latest hedge fund action regarding Cara Therapeutics Inc (NASDAQ:CARA).
Do Hedge Funds Think CARA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from the fourth quarter of 2020. By comparison, 10 hedge funds held shares or bullish call options in CARA a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Farallon Capital was the largest shareholder of Cara Therapeutics Inc (NASDAQ:CARA), with a stake worth $53.5 million reported as of the end of March. Trailing Farallon Capital was Chescapmanager LLC, which amassed a stake valued at $28.5 million. Ikarian Capital, Kingdon Capital, and Ikarian Capital 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 Burrage Capital Management allocated the biggest weight to Cara Therapeutics Inc (NASDAQ:CARA), around 3.17% of its 13F portfolio. Chescapmanager LLC is also relatively very bullish on the stock, earmarking 3.04 percent of its 13F equity portfolio to CARA.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Burrage Capital Management, managed by Christiana Goh Bardon, initiated the largest position in Cara Therapeutics Inc (NASDAQ:CARA). Burrage Capital Management had $3.9 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $3.8 million position during the quarter. The other funds with brand new CARA positions are Michael Gelband’s ExodusPoint Capital, Israel Englander’s Millennium Management, and D. E. Shaw’s D E Shaw.
Let’s check out hedge fund activity in other stocks similar to Cara Therapeutics Inc (NASDAQ:CARA). These stocks are Corecivic Inc. (NYSE:CXW), Extreme Networks, Inc (NASDAQ:EXTR), QuinStreet Inc (NASDAQ:QNST), iClick Interactive Asia Group Limited (NASDAQ:ICLK), Celestica Inc. (NYSE:CLS), Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX), and Nkarta, Inc. (NASDAQ:NKTX). This group of stocks’ market caps resemble CARA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CXW | 18 | 95826 | 0 |
| EXTR | 25 | 182791 | 6 |
| QNST | 20 | 158803 | 4 |
| ICLK | 9 | 19971 | 1 |
| CLS | 13 | 134815 | 0 |
| SNDX | 33 | 486256 | -4 |
| NKTX | 15 | 384765 | 1 |
| Average | 19 | 209032 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $209 million. That figure was $153 million in CARA’s case. Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is the most popular stock in this table. On the other hand iClick Interactive Asia Group Limited (NASDAQ:ICLK) is the least popular one with only 9 bullish hedge fund positions. Cara Therapeutics Inc (NASDAQ:CARA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CARA is 50.5. 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 negative signal and 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately CARA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); CARA investors were disappointed as the stock returned -45% since the end of March (through 7/23) 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 in 2021.
Follow Cara Therapeutics Inc. (NASDAQ:CARA)
Follow Cara Therapeutics Inc. (NASDAQ:CARA)
Suggested Articles:
- 10 Most Expensive Luxury Brands In The World
- Top Pharmaceutical Companies in India
- 10 Best Weed Stocks to Buy Now
Disclosure: None. This article was originally published at Insider Monkey.
