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 Peltz’s recent General Electric 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 Audentes Therapeutics, Inc. (NASDAQ:BOLD).
Audentes Therapeutics, Inc. (NASDAQ:BOLD) was in 27 hedge funds’ portfolios at the end of the second quarter of 2019. BOLD investors should pay attention to an increase in hedge fund interest lately. There were 26 hedge funds in our database with BOLD holdings at the end of the previous quarter. Our calculations also showed that BOLD isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the new hedge fund action surrounding Audentes Therapeutics, Inc. (NASDAQ:BOLD).
What does smart money think about Audentes Therapeutics, Inc. (NASDAQ:BOLD)?
Heading into the third quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the first quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in BOLD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Partner Fund Management held the most valuable stake in Audentes Therapeutics, Inc. (NASDAQ:BOLD), which was worth $122.2 million at the end of the second quarter. On the second spot was Redmile Group which amassed $112.5 million worth of shares. Moreover, Great Point Partners, OrbiMed Advisors, and Baker Bros. Advisors were also bullish on Audentes Therapeutics, Inc. (NASDAQ:BOLD), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Eversept Partners, managed by Kamran Moghtaderi, initiated the biggest position in Audentes Therapeutics, Inc. (NASDAQ:BOLD). Eversept Partners had $6 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Benjamin A. Smith’s Laurion Capital Management, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s go over hedge fund activity in other stocks similar to Audentes Therapeutics, Inc. (NASDAQ:BOLD). We will take a look at LGI Homes Inc (NASDAQ:LGIH), Oasis Petroleum Inc. (NYSE:OAS), Moelis & Company (NYSE:MC), and Enanta Pharmaceuticals Inc (NASDAQ:ENTA). All of these stocks’ market caps match BOLD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LGIH | 12 | 127230 | -2 |
| OAS | 21 | 295575 | -6 |
| MC | 13 | 61723 | -10 |
| ENTA | 20 | 229372 | 0 |
| Average | 16.5 | 178475 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $643 million in BOLD’s case. Oasis Petroleum Inc. (NYSE:OAS) is the most popular stock in this table. On the other hand LGI Homes Inc (NASDAQ:LGIH) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Audentes Therapeutics, Inc. (NASDAQ:BOLD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately BOLD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BOLD were disappointed as the stock returned -25.8% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
