Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Cidara Therapeutics Inc (NASDAQ:CDTX) from the perspective of those successful funds.
Is Cidara Therapeutics Inc (NASDAQ:CDTX) an outstanding investment now? Prominent investors are actually reducing their bets on the stock. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings decreased by 2 in recent months. There were 7 hedge funds in our database with CDTX holdings at the end of September. At the end of this article we will also compare CDTX to other stocks including Enzymotec Ltd (NASDAQ:ENZY), GigOptix Inc (NYSEAMEX:GIG), and CAI International Inc (NYSE:CAI) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
With all of this in mind, let’s review the recent action regarding Cidara Therapeutics Inc (NASDAQ:CDTX).
Hedge fund activity in Cidara Therapeutics Inc (NASDAQ:CDTX)
At Q3’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CDTX over the last 5 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Frazier Healthcare Partners, led by Alan Frazier, holds the largest position in Cidara Therapeutics Inc (NASDAQ:CDTX). According to regulatory filings, the fund has a $15 million position in the stock, comprising 7.4% of its 13F portfolio. Sitting at the No. 2 spot is Aisling Capital, led by Dennis Purcell, which holds a $11.7 million position; 2.4% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish consist of Joseph Edelman’s Perceptive Advisors, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management and Hal Mintz’s Sabby Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.