Hedge Funds Are Selling ChemoCentryx Inc (CCXI)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of ChemoCentryx Inc (NASDAQ:CCXI) based on that data.

Is ChemoCentryx Inc (NASDAQ:CCXI) a buy, sell, or hold? Investors who are in the know were taking a bearish view. The number of bullish hedge fund bets fell by 3 recently. ChemoCentryx Inc (NASDAQ:CCXI) was in 20 hedge funds’ portfolios at the end of March. The all time high for this statistic is 31. Our calculations also showed that CCXI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 23 hedge funds in our database with CCXI holdings at the end of December.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Tim Woolley of Polar Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind let’s take a peek at the fresh hedge fund action encompassing ChemoCentryx Inc (NASDAQ:CCXI).

Do Hedge Funds Think CCXI Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the fourth quarter of 2020. On the other hand, there were a total of 30 hedge funds with a bullish position in CCXI a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, RA Capital Management was the largest shareholder of ChemoCentryx Inc (NASDAQ:CCXI), with a stake worth $182.3 million reported as of the end of March. Trailing RA Capital Management was Cormorant Asset Management, which amassed a stake valued at $43.6 million. Polar Capital, Baker Bros. Advisors, and Marshall Wace LLP 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 Octagon Capital Advisors allocated the biggest weight to ChemoCentryx Inc (NASDAQ:CCXI), around 2.9% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, setting aside 2.75 percent of its 13F equity portfolio to CCXI.

Judging by the fact that ChemoCentryx Inc (NASDAQ:CCXI) has experienced falling interest from hedge fund managers, it’s easy to see that there was a specific group of funds that elected to cut their entire stakes last quarter. Intriguingly, James A. Silverman’s Opaleye Management dropped the biggest stake of the 750 funds followed by Insider Monkey, valued at an estimated $21.7 million in stock, and Prashanth Jayaram’s Tri Locum Partners was right behind this move, as the fund dumped about $10.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to ChemoCentryx Inc (NASDAQ:CCXI). We will take a look at National Vision Holdings, Inc. (NASDAQ:EYE), Cloudera, Inc. (NYSE:CLDR), PotlatchDeltic Corporation (NASDAQ:PCH), Equitrans Midstream Corporation (NYSE:ETRN), Applied Industrial Technologies Inc (NYSE:AIT), Diodes Incorporated (NASDAQ:DIOD), and SPS Commerce, Inc. (NASDAQ:SPSC). This group of stocks’ market values are closest to CCXI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EYE 24 285800 0
CLDR 30 865678 1
PCH 26 152275 3
ETRN 28 361643 3
AIT 21 67909 0
DIOD 21 161053 7
SPSC 20 133241 6
Average 24.3 289657 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $290 million. That figure was $386 million in CCXI’s case. Cloudera, Inc. (NYSE:CLDR) is the most popular stock in this table. On the other hand SPS Commerce, Inc. (NASDAQ:SPSC) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks ChemoCentryx Inc (NASDAQ:CCXI) is even less popular than SPSC. Our overall hedge fund sentiment score for CCXI is 21.4. 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. Hedge funds dodged a bullet by taking a bearish stance towards CCXI. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market again by 7.7 percentage points. Unfortunately CCXI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); CCXI investors were disappointed as the stock returned -69.1% 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.