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Hedge Funds Are Warming Up To BioXcel Therapeutics, Inc. (BTAI)

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 BioXcel Therapeutics, Inc. (NASDAQ:BTAI) and determine whether the smart money was really smart about this stock.

BioXcel Therapeutics, Inc. (NASDAQ:BTAI) has seen an increase in support from the world’s most elite money managers lately. BTAI was in 10 hedge funds’ portfolios at the end of the first quarter of 2020. There were 3 hedge funds in our database with BTAI positions at the end of the previous quarter. Our calculations also showed that BTAI 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.

According to most stock holders, hedge funds are assumed to be slow, old financial tools of yesteryear. While there are more than 8000 funds trading at present, We hone in on the upper echelon of this club, about 850 funds. These hedge fund managers handle most of the hedge fund industry’s total asset base, and by tailing their finest stock picks, Insider Monkey has figured out several investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Samuel Isaly Orbimed Advisors

Samuel Isaly of OrbiMed Advisors

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 let’s take a gander at the latest hedge fund action surrounding BioXcel Therapeutics, Inc. (NASDAQ:BTAI).

How are hedge funds trading BioXcel Therapeutics, Inc. (NASDAQ:BTAI)?

At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 233% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards BTAI over the last 18 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Is BTAI A Good Stock To Buy?

Among these funds, Ikarian Capital held the most valuable stake in BioXcel Therapeutics, Inc. (NASDAQ:BTAI), which was worth $15.5 million at the end of the third quarter. On the second spot was Acuta Capital Partners which amassed $7 million worth of shares. Driehaus Capital, OrbiMed Advisors, and Ikarian Capital 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 Acuta Capital Partners allocated the biggest weight to BioXcel Therapeutics, Inc. (NASDAQ:BTAI), around 3.41% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, designating 1.17 percent of its 13F equity portfolio to BTAI.

As one would reasonably expect, some big names have jumped into BioXcel Therapeutics, Inc. (NASDAQ:BTAI) headfirst. Acuta Capital Partners, managed by Manfred Yu, created the biggest position in BioXcel Therapeutics, Inc. (NASDAQ:BTAI). Acuta Capital Partners had $7 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $6.7 million position during the quarter. The following funds were also among the new BTAI investors: Samuel Isaly’s OrbiMed Advisors, Jonathan Auerbach’s Hound Partners, and Benjamin A. Smith’s Laurion Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as BioXcel Therapeutics, Inc. (NASDAQ:BTAI) but similarly valued. These stocks are Urstadt Biddle Properties Inc. (NYSE:UBP), SurModics, Inc. (NASDAQ:SRDX), Central Pacific Financial Corp. (NYSE:CPF), and Kura Oncology, Inc. (NASDAQ:KURA). This group of stocks’ market values are closest to BTAI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
UBP 1 979 0
SRDX 12 120004 -5
CPF 16 47370 -1
KURA 23 121653 1
Average 13 72502 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $36 million in BTAI’s case. Kura Oncology, Inc. (NASDAQ:KURA) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc. (NYSE:UBP) is the least popular one with only 1 bullish hedge fund positions. BioXcel Therapeutics, Inc. (NASDAQ:BTAI) is not the least popular stock in this group but hedge fund interest is still below 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 and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on BTAI as the stock returned 137.2% during the second quarter and outperformed the market by an even larger margin.

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