Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Sema4 Holdings Corp. (NASDAQ:SMFR) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is Sema4 Holdings Corp. (NASDAQ:SMFR) a buy, sell, or hold? Money managers were taking a bullish view. The number of bullish hedge fund positions went up by 34 in recent months. Sema4 Holdings Corp. (NASDAQ:SMFR) was in 34 hedge funds’ portfolios at the end of September. Our calculations also showed that SMFR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Keith Meister of Corvex Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s analyze the fresh hedge fund action encompassing Sema4 Holdings Corp. (NASDAQ:SMFR).
Do Hedge Funds Think SMFR Is A Good Stock To Buy Now?
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 34 from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards SMFR over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Deerfield Management held the most valuable stake in Sema4 Holdings Corp. (NASDAQ:SMFR) , which was worth $105.1 million at the end of the third quarter. On the second spot was ARK Investment Management which amassed $71.3 million worth of shares. SB Management, Casdin Capital, and Corvex 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 SB Management allocated the biggest weight to Sema4 Holdings Corp. (NASDAQ:SMFR) , around 7.02% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, setting aside 5.15 percent of its 13F equity portfolio to SMFR.
As aggregate interest increased, key money managers have jumped into Sema4 Holdings Corp. (NASDAQ:SMFR) headfirst. Deerfield Management, managed by James E. Flynn, assembled the biggest position in Sema4 Holdings Corp. (NASDAQ:SMFR) . Deerfield Management had $105.1 million invested in the company at the end of the quarter. Catherine D. Wood’s ARK Investment Management also initiated a $71.3 million position during the quarter. The other funds with new positions in the stock are Masayoshi Son’s SB Management, Eli Casdin’s Casdin Capital, and Keith Meister’s Corvex Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sema4 Holdings Corp. (NASDAQ:SMFR) but similarly valued. We will take a look at Argo Group International Holdings, Ltd. (NYSE:ARGO), Quanterix Corporation (NASDAQ:QTRX), Clean Energy Fuels Corp (NASDAQ:CLNE), Granite Construction Incorporated (NYSE:GVA), Microvision, Inc. (NASDAQ:MVIS), Poshmark, Inc. (NASDAQ:POSH), and Pretium Resources Inc (NYSE:PVG). This group of stocks’ market valuations resemble SMFR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARGO | 14 | 238823 | 2 |
| QTRX | 19 | 251379 | -1 |
| CLNE | 14 | 44764 | -3 |
| GVA | 15 | 27341 | 1 |
| MVIS | 6 | 10235 | -5 |
| POSH | 18 | 40616 | 3 |
| PVG | 21 | 123569 | -1 |
| Average | 15.3 | 105247 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $484 million in SMFR’s case. Pretium Resources Inc (NYSE:PVG) is the most popular stock in this table. On the other hand Microvision, Inc. (NASDAQ:MVIS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Sema4 Holdings Corp. (NASDAQ:SMFR) is more popular among hedge funds. Our overall hedge fund sentiment score for SMFR is 90. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, SMFR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SMFR were disappointed as the stock returned -54.9% since the end of the third quarter (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
