Hedge Funds Are Warming Up To Harpoon Therapeutics, Inc. (HARP)

The latest 13F reporting period has come and gone, and 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. Now, 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 you are going to find out whether hedge funds thoughtHarpoon Therapeutics, Inc. (NASDAQ:HARP) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Harpoon Therapeutics, Inc. (NASDAQ:HARP) a cheap stock to buy now? The best stock pickers were turning bullish. The number of bullish hedge fund bets improved by 3 lately. Our calculations also showed that HARP 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). HARP was in 11 hedge funds’ portfolios at the end of the first quarter of 2020. There were 8 hedge funds in our database with HARP holdings at the end of the previous quarter.

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.

Oleg Nodelman EcoR1 Capital

Oleg Nodelman of EcoR1 Capital

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. Now let’s analyze the fresh hedge fund action surrounding Harpoon Therapeutics, Inc. (NASDAQ:HARP).

How have hedgies been trading Harpoon Therapeutics, Inc. (NASDAQ:HARP)?

At Q1’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HARP over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is HARP A Good Stock To Buy?

Among these funds, OrbiMed Advisors held the most valuable stake in Harpoon Therapeutics, Inc. (NASDAQ:HARP), which was worth $28.3 million at the end of the third quarter. On the second spot was Cormorant Asset Management which amassed $7.5 million worth of shares. Soleus Capital, Baker Bros. Advisors, and Deerfield Management 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 Soleus Capital allocated the biggest weight to Harpoon Therapeutics, Inc. (NASDAQ:HARP), around 6.35% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, designating 0.71 percent of its 13F equity portfolio to HARP.

Now, key hedge funds were leading the bulls’ herd. Deerfield Management, managed by James E. Flynn, initiated the largest position in Harpoon Therapeutics, Inc. (NASDAQ:HARP). Deerfield Management had $1.9 million invested in the company at the end of the quarter. Nathan Fischel’s DAFNA Capital Management also initiated a $1.7 million position during the quarter. The following funds were also among the new HARP investors: Thomas Bailard’s Bailard Inc and Michael Rockefeller and KarláKroeker’s Woodline Partners.

Let’s now take a look at hedge fund activity in other stocks similar to Harpoon Therapeutics, Inc. (NASDAQ:HARP). These stocks are Telaria, Inc. (NYSE:TLRA), Avid Bioservices, Inc. (NASDAQ:CDMO), Cars.com Inc. (NYSE:CARS), and HBT Financial, Inc. (NASDAQ:HBT). This group of stocks’ market caps are similar to HARP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TLRA 15 50300 0
CDMO 11 46320 -6
CARS 24 67845 -10
HBT 7 7919 -3
Average 14.25 43096 -4.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $52 million in HARP’s case. Cars.com Inc. (NYSE:CARS) is the most popular stock in this table. On the other hand HBT Financial, Inc. (NASDAQ:HBT) is the least popular one with only 7 bullish hedge fund positions. Harpoon Therapeutics, Inc. (NASDAQ:HARP) 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 HARP as the stock returned 43.4% 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.