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Did Hedge Funds Make The Right Call On Coherus Biosciences Inc (CHRS) ?

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 first 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 4.5 years and analyze what the smart money thinks of Coherus Biosciences Inc (NASDAQ:CHRS) based on that data and determine whether they were really smart about the stock.

Coherus Biosciences Inc (NASDAQ:CHRS) investors should be aware of an increase in activity from the world’s largest hedge funds of late. CHRS was in 35 hedge funds’ portfolios at the end of March. There were 32 hedge funds in our database with CHRS positions at the end of the previous quarter. Our calculations also showed that CHRS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are more than 8000 funds with their doors open today, Our researchers look at the moguls of this group, about 850 funds. Most estimates calculate that this group of people handle the majority of the hedge fund industry’s total asset base, and by following their finest picks, Insider Monkey has figured out various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the latest hedge fund action encompassing Coherus Biosciences Inc (NASDAQ:CHRS).

Hedge fund activity in Coherus Biosciences Inc (NASDAQ:CHRS)

At Q1’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHRS over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Consonance Capital Management held the most valuable stake in Coherus Biosciences Inc (NASDAQ:CHRS), which was worth $32.8 million at the end of the third quarter. On the second spot was Rock Springs Capital Management which amassed $31.6 million worth of shares. Rubric Capital Management, D E Shaw, and Sio 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 Sio Capital allocated the biggest weight to Coherus Biosciences Inc (NASDAQ:CHRS), around 5.86% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, dishing out 4.06 percent of its 13F equity portfolio to CHRS.

As one would reasonably expect, some big names have jumped into Coherus Biosciences Inc (NASDAQ:CHRS) headfirst. Consonance Capital Management, managed by Mitchell Blutt, established the most outsized position in Coherus Biosciences Inc (NASDAQ:CHRS). Consonance Capital Management had $32.8 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also initiated a $6.9 million position during the quarter. The other funds with new positions in the stock are Kevin C. Tang’s Tang Capital Management, Chuck Royce’s Royce & Associates, and Aaron Cowen’s Suvretta Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Coherus Biosciences Inc (NASDAQ:CHRS). These stocks are Dana Incorporated (NYSE:DAN), Altra Industrial Motion Corp. (NASDAQ:AIMC), Sykes Enterprises, Incorporated (NASDAQ:SYKE), and Inogen Inc (NASDAQ:INGN). This group of stocks’ market valuations are similar to CHRS’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DAN 28 143927 1
AIMC 15 80915 0
SYKE 14 56085 -4
INGN 12 60103 -9
Average 17.25 85258 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $217 million in CHRS’s case. Dana Incorporated (NYSE:DAN) is the most popular stock in this table. On the other hand Inogen Inc (NASDAQ:INGN) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Coherus Biosciences Inc (NASDAQ:CHRS) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately CHRS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on CHRS were disappointed as the stock returned 10.1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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