We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Nektar Therapeutics (NASDAQ:NKTR).
Is Nektar Therapeutics (NASDAQ:NKTR) going to take off soon? Prominent investors are becoming less confident. The number of bullish hedge fund bets shrunk by 10 recently. Nektar Therapeutics (NASDAQ:NKTR) was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. There were 21 hedge funds in our database with Nektar Therapeutics (NASDAQ:NKTR) positions at the end of the previous quarter. At the end of this article, we will also compare Nektar Therapeutics (NASDAQ:NKTR) to other stocks, including LegacyTexas Financial Group Inc (NASDAQ:LTXB), Synchronoss Technologies, Inc. (NASDAQ:SNCR), and Greatbatch Inc (NYSE:GB) to get a better sense of its popularity.
According to most shareholders, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, Our experts hone in on the elite of this group, approximately 700 funds. These investment experts control bulk of all hedge funds’ total capital, and by watching their best investments, Insider Monkey has identified various investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to take a peek at the key action surrounding Nektar Therapeutics (NASDAQ:NKTR).
How are hedge funds trading Nektar Therapeutics (NASDAQ:NKTR)?
Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 48% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the most valuable position in Nektar Therapeutics (NASDAQ:NKTR), worth close to $44.2 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Stephen DuBois of Camber Capital Management, with a $24.7 million position; 2.1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions consist of Paul Sinclair’s Blue Jay Capital Management, Bihua Chen’s Cormorant Asset Management, and Jonathan Lourie and Stuart Fiertz’s Cheyne Capital.
Since Nektar Therapeutics (NASDAQ:NKTR) has faced a declining sentiment from the smart money, logic holds that there lies a certain “tier” of fund managers who sold off their full holdings heading into Q4. At the top of the heap, Joel Greenblatt’s Gotham Asset Management cut the biggest position of all the hedgies tracked by Insider Monkey, comprising about $17.1 million in stock. D E Shaw also cut its stock, about $6.6 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest dropped by 10 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nektar Therapeutics (NASDAQ:NKTR) but similarly valued. These stocks are LegacyTexas Financial Group Inc (NASDAQ:LTXB), Synchronoss Technologies, Inc. (NASDAQ:SNCR), Greatbatch Inc (NYSE:GB), and Concordia Healthcare Corp (NASDAQ:CXRX). This group of stocks’ market caps matches Nektar Therapeutics (NASDAQ:NKTR)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $92 million in Nektar Therapeutics (NASDAQ:NKTR)’s case. Synchronoss Technologies, Inc. (NASDAQ:SNCR) is the most popular stock in this table. On the other hand, LegacyTexas Financial Group Inc (NASDAQ:LTXB) is the least popular one with only 10 bullish hedge fund positions. Nektar Therapeutics (NASDAQ:NKTR) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Synchronoss Technologies, Inc. (NASDAQ:SNCR) might be a better candidate to consider a long position.