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Do Hedge Funds Love InVitae Corporation (NVTA)?

Is InVitae Corporation (NYSE:NVTA) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is InVitae Corporation (NYSE:NVTA) worth your attention right now? Investors who are in the know are getting more bullish. The number of long hedge fund bets went up by 7 recently. Our calculations also showed that nvta isn’t among the 30 most popular stocks among hedge funds. NVTA was in 20 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with NVTA positions at the end of the previous quarter.

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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 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.

Samuel Isaly Orbimed Advisors

We’re going to analyze the fresh hedge fund action regarding InVitae Corporation (NYSE:NVTA).

How are hedge funds trading InVitae Corporation (NYSE:NVTA)?

Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 54% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NVTA over the last 13 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with NVTA Positions

The largest stake in InVitae Corporation (NYSE:NVTA) was held by Baker Bros. Advisors, which reported holding $140.5 million worth of stock at the end of September. It was followed by Casdin Capital with a $40.2 million position. Other investors bullish on the company included Perceptive Advisors, Rock Springs Capital Management, and OrbiMed Advisors.

As aggregate interest increased, key hedge funds have jumped into InVitae Corporation (NYSE:NVTA) headfirst. Casdin Capital, managed by Eli Casdin, assembled the biggest position in InVitae Corporation (NYSE:NVTA). Casdin Capital had $40.2 million invested in the company at the end of the quarter. Joel Ramin’s 12 West Capital Management also made a $13.4 million investment in the stock during the quarter. The other funds with brand new NVTA positions are D. E. Shaw’s D E Shaw, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as InVitae Corporation (NYSE:NVTA) but similarly valued. These stocks are Knoll Inc (NYSE:KNL), National Bank Holdings Corp (NYSE:NBHC), National Western Life Group, Inc. (NASDAQ:NWLI), and Piper Jaffray Companies (NYSE:PJC). All of these stocks’ market caps resemble NVTA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KNL 14 42034 1
NBHC 9 97149 0
NWLI 7 20438 -1
PJC 7 48944 1
Average 9.25 52141 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $319 million in NVTA’s case. Knoll Inc (NYSE:KNL) is the most popular stock in this table. On the other hand National Western Life Group, Inc. (NASDAQ:NWLI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks InVitae Corporation (NYSE:NVTA) 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. This article was originally published at Insider Monkey.

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