The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Precision BioSciences, Inc. (NASDAQ:DTIL) and determine whether the smart money was really smart about this stock.
Is Precision BioSciences, Inc. (NASDAQ:DTIL) going to take off soon? Investors who are in the know were taking a bullish view. The number of long hedge fund bets advanced by 1 lately. Our calculations also showed that DTIL 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 58 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to view the recent hedge fund action encompassing Precision BioSciences, Inc. (NASDAQ:DTIL).
How are hedge funds trading Precision BioSciences, Inc. (NASDAQ:DTIL)?
At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in DTIL a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Cormorant Asset Management, managed by Bihua Chen, holds the largest position in Precision BioSciences, Inc. (NASDAQ:DTIL). Cormorant Asset Management has a $2.1 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Bailard Inc, managed by Thomas Bailard, which holds a $1.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Benjamin A. Smith’s Laurion Capital Management, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Sphera Global Healthcare Fund allocated the biggest weight to Precision BioSciences, Inc. (NASDAQ:DTIL), around 0.11% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to DTIL.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Precision BioSciences, Inc. (NASDAQ:DTIL) headfirst. Millennium Management, managed by Israel Englander, assembled the most valuable position in Precision BioSciences, Inc. (NASDAQ:DTIL). Millennium Management had $1 million invested in the company at the end of the quarter. Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund also made a $0.9 million investment in the stock during the quarter. The other funds with brand new DTIL positions are Renaissance Technologies, Peter Muller’s PDT Partners, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s now review hedge fund activity in other stocks similar to Precision BioSciences, Inc. (NASDAQ:DTIL). We will take a look at Tufin Software Technologies Ltd. (NYSE:TUFN), Talos Energy, Inc. (NYSE:TALO), ShotSpotter, Inc. (NASDAQ:SSTI), and Graf Industrial Corp. (NYSE:GRAF). This group of stocks’ market values match DTIL’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 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $10 million in DTIL’s case. Graf Industrial Corp. (NYSE:GRAF) is the most popular stock in this table. On the other hand Tufin Software Technologies Ltd. (NYSE:TUFN) is the least popular one with only 5 bullish hedge fund positions. Precision BioSciences, Inc. (NASDAQ:DTIL) 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on DTIL as the stock returned 38.1% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.