Cytokinetics, Inc. (CYTK) Hedge Funds Are Snapping Up

Looking for high-potential stocks? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 7.6% in the 12 months ending November 21, with more than 51% of the stocks in the index failing to beat the benchmark. Therefore, the odds that one will pin down a winner by randomly picking a stock are less than the odds in a fair coin-tossing game. Conversely, best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% during the same 12-month period. Coincidence? It might happen to be so, but it is unlikely. Our research covering a 17-year period indicates that hedge funds’ stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Cytokinetics, Inc. (NASDAQ:CYTK) .

Cytokinetics, Inc. (NASDAQ:CYTK) was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. CYTK shareholders have witnessed an increase in hedge fund interest lately. There were 13 hedge funds in our database with CYTK positions at the end of the previous quarter. 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 Dynex Capital Inc (NYSE:DX), Landec Corporation (NASDAQ:LNDC), and Habit Restaurants Inc (NASDAQ:HABT) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Hedge fund activity in Cytokinetics, Inc. (NASDAQ:CYTK)

At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 8% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in CYTK at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Biotechnology Value Fund / BVF Inc, led by Mark Lampert, holds the number one position in Cytokinetics, Inc. (NASDAQ:CYTK). Biotechnology Value Fund / BVF Inc has a $45.9 million position in the stock, comprising 8.6% of its 13F portfolio. Sitting at the No. 2 spot is Lansdowne Partners, led by Alex Snow, holding a $21.3 million position. Some other peers with similar optimism contain Oleg Nodelman’s EcoR1 Capital, and D. E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Consequently, specific money managers were breaking ground themselves. Millennium Management, one of the 10 largest hedge funds in the world, created the most valuable position in Cytokinetics, Inc. (NASDAQ:CYTK). Millennium Management had $2.9 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0.5 million position during the quarter. The following funds were also among the new CYTK investors: Ken Griffin’s Citadel Investment Group, and Mike Vranos’ Ellington.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Cytokinetics, Inc. (NASDAQ:CYTK) but similarly valued. We will take a look at Dynex Capital Inc (NYSE:DX), Landec Corporation (NASDAQ:LNDC), Habit Restaurants Inc (NASDAQ:HABT), and Johnson Outdoors Inc. (NASDAQ:JOUT). This group of stocks’ market valuations are closest to CYTK’s market valuation.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $86 million in CYTK’s case. Habit Restaurants Inc (NASDAQ:HABT) is the most popular stock in this table. On the other hand Landec Corporation (NASDAQ:LNDC) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Cytokinetics, Inc. (NASDAQ:CYTK) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None