Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Cidara Therapeutics Inc (NASDAQ:CDTX).
Is Cidara Therapeutics Inc (NASDAQ:CDTX) a worthy investment right now? Money managers are getting more optimistic. The number of bullish hedge fund bets inched up by 1 recently. CDTX was in 10 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with CDTX holdings at the end of the previous quarter. At the end of this article we will also compare CDTX to other stocks including Inventure Foods Inc (NASDAQ:SNAK), EMCORE Corporation (NASDAQ:EMKR), and ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS) to get a better sense of its popularity.
Follow Cidara Therapeutics Inc. (NASDAQ:CDTX)
Follow Cidara Therapeutics Inc. (NASDAQ:CDTX)
If you’d ask most investors, hedge funds are viewed as unimportant, outdated financial tools of years past. While there are over 8,000 funds trading at present, Our researchers hone in on the aristocrats of this club, about 700 funds. It is estimated that this group of investors command bulk of the smart money’s total capital, and by shadowing their matchless stock picks, Insider Monkey has identified various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to take a glance at the new action encompassing Cidara Therapeutics Inc (NASDAQ:CDTX).
What does the smart money think about Cidara Therapeutics Inc (NASDAQ:CDTX)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, RA Capital Management, managed by Peter Kolchinsky, holds the largest position in Cidara Therapeutics Inc (NASDAQ:CDTX). RA Capital Management has a $15 million position in the stock, comprising 2.2% of its 13F portfolio. The second most bullish fund manager is Aisling Capital, managed by Dennis Purcell, which holds a $13 million position; 2.3% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish encompass Joseph Edelman’s Perceptive Advisors, Hal Mintz’s Sabby Capital and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Cidara Therapeutics Inc (NASDAQ:CDTX) headfirst. Aisling Capital, managed by Dennis Purcell, created the largest position in Cidara Therapeutics Inc (NASDAQ:CDTX). Aisling Capital had $13 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Cidara Therapeutics Inc (NASDAQ:CDTX). We will take a look at Inventure Foods Inc (NASDAQ:SNAK), EMCORE Corporation (NASDAQ:EMKR), ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS), and Monroe Capital Corp (NASDAQ:MRCC). All of these stocks’ market caps resemble CDTX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SNAK | 6 | 11759 | -4 |
| EMKR | 16 | 32005 | 4 |
| BIS | 4 | 30595 | -1 |
| MRCC | 4 | 1847 | 3 |
As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $53 million in CDTX’s case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand ProShares UltraShort Nasdaq Biotech (NASDAQ:BIS) is the least popular one with only 4 bullish hedge fund positions. Cidara Therapeutics Inc (NASDAQ:CDTX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EMKR might be a better candidate to consider a long position.