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Hedge Funds Are Nibbling On Mirati Therapeutics, Inc. (MRTX)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Mirati Therapeutics, Inc. (NASDAQ:MRTX) based on those filings.

Mirati Therapeutics, Inc. (NASDAQ:MRTX) investors should be aware of an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that MRTX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the latest hedge fund action regarding Mirati Therapeutics, Inc. (NASDAQ:MRTX).

What have hedge funds been doing with Mirati Therapeutics, Inc. (NASDAQ:MRTX)?

At the end of the first quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MRTX over the last 18 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Behzad Aghazadeh’s Avoro Capital Advisors (venBio Select Advisor) has the number one position in Mirati Therapeutics, Inc. (NASDAQ:MRTX), worth close to $316.1 million, corresponding to 10.7% of its total 13F portfolio. Sitting at the No. 2 spot is Joseph Edelman of Perceptive Advisors, with a $255.2 million position; the fund has 6.6% of its 13F portfolio invested in the stock. Some other peers that are bullish comprise Samuel Isaly’s OrbiMed Advisors, Julian Baker and Felix Baker’s Baker Bros. Advisors and Bihua Chen’s Cormorant Asset Management. In terms of the portfolio weights assigned to each position Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to Mirati Therapeutics, Inc. (NASDAQ:MRTX), around 10.67% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, dishing out 6.65 percent of its 13F equity portfolio to MRTX.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Rhenman & Partners Asset Management, managed by Henrik Rhenman, established the most valuable position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). Rhenman & Partners Asset Management had $10 million invested in the company at the end of the quarter. Charles Clough’s Clough Capital Partners also initiated a $8.3 million position during the quarter. The other funds with brand new MRTX positions are Michael Rockefeller and KarláKroeker’s Woodline Partners, Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, and Nathan Fischel’s DAFNA Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mirati Therapeutics, Inc. (NASDAQ:MRTX) but similarly valued. We will take a look at Cabot Microelectronics Corporation (NASDAQ:CCMP), The Wendy’s Company (NASDAQ:WEN), DXC Technology Company (NYSE:DXC), and Vedanta Ltd (NYSE:VEDL). This group of stocks’ market values match MRTX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCMP 16 232320 -8
WEN 35 706422 7
DXC 41 382695 -6
VEDL 11 26697 -2
Average 25.75 337034 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $337 million. That figure was $1123 million in MRTX’s case. DXC Technology Company (NYSE:DXC) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 11 bullish hedge fund positions. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on MRTX as the stock returned 29% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.