Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Tricida, Inc. (NASDAQ:TCDA)? The smart money sentiment can provide an answer to this question.
Tricida, Inc. (NASDAQ:TCDA) has seen an increase in enthusiasm from smart money recently. Tricida, Inc. (NASDAQ:TCDA) was in 20 hedge funds’ portfolios at the end of March. The all time high for this statistic is 24. Our calculations also showed that TCDA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Today there are plenty of tools market participants can use to appraise their stock investments. A couple of the most under-the-radar tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best money managers can outpace the S&P 500 by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Didric Cederholm of Lion Point Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to review the latest hedge fund action regarding Tricida, Inc. (NASDAQ:TCDA).
Do Hedge Funds Think TCDA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in TCDA over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
Among these funds, OrbiMed Advisors held the most valuable stake in Tricida, Inc. (NASDAQ:TCDA), which was worth $50.9 million at the end of the fourth quarter. On the second spot was Point72 Asset Management which amassed $14 million worth of shares. Lion Point, D E Shaw, and Ikarian 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 Burrage Capital Management allocated the biggest weight to Tricida, Inc. (NASDAQ:TCDA), around 2.82% of its 13F portfolio. Lion Point is also relatively very bullish on the stock, designating 1.76 percent of its 13F equity portfolio to TCDA.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in Tricida, Inc. (NASDAQ:TCDA). Point72 Asset Management had $14 million invested in the company at the end of the quarter. Christiana Goh Bardon’s Burrage Capital Management also initiated a $3.5 million position during the quarter. The following funds were also among the new TCDA investors: Jeffrey Jay and David Kroin’s Great Point Partners, Anand Parekh’s Alyeska Investment Group, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Tricida, Inc. (NASDAQ:TCDA) but similarly valued. We will take a look at Kura Sushi USA, Inc. (NASDAQ:KRUS), Capital Bancorp, Inc. (NASDAQ:CBNK), CNFinance Holdings Limited (NYSE:CNF), Ovid Therapeutics Inc. (NASDAQ:OVID), Protective Insurance Corporation (NASDAQ:PTVCB), NGL Energy Partners LP (NYSE:NGL), and Northrim BanCorp, Inc. (NASDAQ:NRIM). This group of stocks’ market valuations are similar to TCDA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRUS | 5 | 22524 | -1 |
| CBNK | 3 | 6770 | 1 |
| CNF | 2 | 148 | 2 |
| OVID | 14 | 72077 | -2 |
| PTVCB | 11 | 27196 | 6 |
| NGL | 5 | 4968 | 3 |
| NRIM | 7 | 11997 | -3 |
| Average | 6.7 | 20811 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.7 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $106 million in TCDA’s case. Ovid Therapeutics Inc. (NASDAQ:OVID) is the most popular stock in this table. On the other hand CNFinance Holdings Limited (NYSE:CNF) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Tricida, Inc. (NASDAQ:TCDA) is more popular among hedge funds. Our overall hedge fund sentiment score for TCDA is 81. 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately TCDA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TCDA were disappointed as the stock returned -30.8% since the end of the first quarter (through 7/16) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
