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Did Hedge Funds Drop The Ball On Chimerix Inc (CMRX) ?

Does Chimerix Inc (NASDAQ:CMRX) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Chimerix Inc (NASDAQ:CMRX) was in 10 hedge funds’ portfolios at the end of March. CMRX investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 11 hedge funds in our database with CMRX holdings at the end of the previous quarter. Our calculations also showed that CMRX isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

Let’s take a glance at the recent hedge fund action regarding Chimerix Inc (NASDAQ:CMRX).

How are hedge funds trading Chimerix Inc (NASDAQ:CMRX)?

At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in CMRX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

CMRX_june2019

Among these funds, Redmile Group held the most valuable stake in Chimerix Inc (NASDAQ:CMRX), which was worth $7.4 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $2.8 million worth of shares. Moreover, Opaleye Management, GLG Partners, and D E Shaw were also bullish on Chimerix Inc (NASDAQ:CMRX), allocating a large percentage of their portfolios to this stock.

Due to the fact that Chimerix Inc (NASDAQ:CMRX) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there were a few funds that slashed their full holdings in the third quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management cut the largest position of the 700 funds watched by Insider Monkey, totaling about $2.6 million in stock. Dennis Purcell’s fund, Aisling Capital, also dumped its stock, about $1.2 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Chimerix Inc (NASDAQ:CMRX). We will take a look at Selecta Biosciences, Inc. (NASDAQ:SELB), CEL-SCI Corporation (NYSE:CVM), Houston Wire & Cable Company (NASDAQ:HWCC), and Riverview Financial Corporation (NASDAQ:RIVE). This group of stocks’ market values match CMRX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SELB 8 18312 0
CVM 3 735 2
HWCC 6 16403 -1
RIVE 3 7952 1
Average 5 10851 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $17 million in CMRX’s case. Selecta Biosciences, Inc. (NASDAQ:SELB) is the most popular stock in this table. On the other hand CEL-SCI Corporation (NYSE:CVM) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Chimerix Inc (NASDAQ:CMRX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on CMRX as the stock returned 57.1% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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