The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Sutro Biopharma, Inc. (NASDAQ:STRO) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Sutro Biopharma, Inc. (NASDAQ:STRO) worth your attention right now? Investors who are in the know were taking a bullish view. The number of long hedge fund bets inched up by 7 in recent months. Sutro Biopharma, Inc. (NASDAQ:STRO) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistics is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that STRO isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox.Now we’re going to review the recent hedge fund action encompassing Sutro Biopharma, Inc. (NASDAQ:STRO).
Hedge fund activity in Sutro Biopharma, Inc. (NASDAQ:STRO)
At second quarter’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in STRO over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Sutro Biopharma, Inc. (NASDAQ:STRO) was held by Biotechnology Value Fund / BVF Inc, which reported holding $18.4 million worth of stock at the end of September. It was followed by RA Capital Management with a $14.9 million position. Other investors bullish on the company included EcoR1 Capital, Samsara BioCapital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Samsara BioCapital allocated the biggest weight to Sutro Biopharma, Inc. (NASDAQ:STRO), around 4.18% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, setting aside 1.13 percent of its 13F equity portfolio to STRO.
Now, some big names were leading the bulls’ herd. RA Capital Management, managed by Peter Kolchinsky, assembled the biggest position in Sutro Biopharma, Inc. (NASDAQ:STRO). RA Capital Management had $14.9 million invested in the company at the end of the quarter. Oleg Nodelman’s EcoR1 Capital also initiated a $14.2 million position during the quarter. The other funds with brand new STRO positions are Steve Cohen’s Point72 Asset Management, Arsani William’s Logos Capital, and Vishal Saluja and Pham Quang’s Endurant Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Sutro Biopharma, Inc. (NASDAQ:STRO) but similarly valued. These stocks are Neptune Wellness Solutions Inc (NASDAQ:NEPT), Griffin Industrial Realty, Inc. (NASDAQ:GRIF), Oppenheimer Holdings Inc. (NYSE:OPY), TrueCar Inc (NASDAQ:TRUE), Nautilus, Inc. (NYSE:NLS), CNB Financial Corporation (NASDAQ:CCNE), and CalAmp Corp. (NASDAQ:CAMP). This group of stocks’ market values match STRO’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.9 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $106 million in STRO’s case. TrueCar Inc (NASDAQ:TRUE) is the most popular stock in this table. On the other hand Neptune Wellness Solutions Inc (NASDAQ:NEPT) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Sutro Biopharma, Inc. (NASDAQ:STRO) is more popular among hedge funds. Our overall hedge fund sentiment score for STRO is 40. 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 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 returned 24.8% in 2020 through the end of September but still managed to beat the market by 19.3 percentage points. Hedge funds were also right about betting on STRO as the stock returned 29.5% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.