Hedge Funds Are Betting On Natera Inc (NTRA)

How do we determine whether Natera Inc (NASDAQ:NTRA) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Natera Inc (NASDAQ:NTRA) was in 10 hedge funds’ portfolios at the end of September. Investors should be aware of an increase in hedge fund sentiment of late, since there were no hedge funds in our database with NTRA positions at the end of the previous quarter. At the end of this article we will also compare NTRA to other stocks, including AlarmCom Hldg Inc (NASDAQ:ALRM), Esperion Therapeutics (NASDAQ:ESPR), and Amphastar Pharmaceuticals Inc (NASDAQ:AMPH) to get a better sense of its popularity.

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With all of this in mind, let’s go over the latest action surrounding Natera Inc (NASDAQ:NTRA).

How have hedgies been trading Natera Inc (NASDAQ:NTRA)?

At the end of the third quarter, a total of 10 top hedge funds tracked by Insider Monkey reported long positions in this stock, which went public in the beginning of July. Natera Inc (NASDAQ:NTRA) quickly attracted the attention of the hedge fund world, with a select group of notable hedge fund managers adding the stock to their portfolios.

Of the funds tracked by Insider Monkey, Samuel Isaly’s OrbiMed Advisors has the largest position in Natera Inc (NASDAQ:NTRA), worth close to $13.8 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Kolchinsky of RA Capital Management, with a $8.5 million position; 1.2% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish comprise Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Julian Baker and Felix Baker’s Baker Bros. Advisors and Hal Mintz’s Sabby Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Natera Inc (NASDAQ:NTRA) but similarly valued. We will take a look at AlarmCom Hldg Inc (NASDAQ:ALRM), Esperion Therapeutics (NASDAQ:ESPR), Amphastar Pharmaceuticals Inc (NASDAQ:AMPH), and TG Therapeutics Inc (NASDAQ:TGTX). This group of stocks’ market caps are similar to NTRA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ALRM 5 5915 -6
ESPR 18 140275 -10
AMPH 12 26198 0
TGTX 10 112681 -3

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. In the case of NTRA, that figure stood at $31 million. Esperion Therapeutics (NASDAQ:ESPR) is the most popular stock in this table, while AlarmCom Hldg Inc (NASDAQ:ALRM) is the least popular one with only 5 bullish hedge fund positions. Although Natera Inc (NASDAQ:NTRA) is not the least popular stock in this group, hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ESPR might be a better candidate to consider a long position.