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Hedge Funds Have Never Been This Bullish On BioCryst Pharmaceuticals, Inc. (BCRX)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) based on that data.

BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Our calculations also showed that BCRX 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.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Kamran Moghtaderi of Eversept Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the key hedge fund action surrounding BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX).

How have hedgies been trading BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)?

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BCRX over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

The largest stake in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) was held by Baker Bros. Advisors, which reported holding $21.9 million worth of stock at the end of September. It was followed by Eversept Partners with a $15.1 million position. Other investors bullish on the company included Adage Capital Management, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), around 3.82% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, dishing out 1.06 percent of its 13F equity portfolio to BCRX.

As aggregate interest increased, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). Balyasny Asset Management had $6 million invested in the company at the end of the quarter. Kerr Neilson’s Platinum Asset Management also initiated a $1.5 million position during the quarter. The other funds with brand new BCRX positions are Manfred Yu’s Acuta Capital Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and David M. Knott’s Dorset Management.

Let’s now take a look at hedge fund activity in other stocks similar to BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). These stocks are Daily Journal Corporation (NASDAQ:DJCO), DURECT Corporation (NASDAQ:DRRX), Autolus Therapeutics plc (NASDAQ:AUTL), and Cellular Biomedicine Group, Inc. (NASDAQ:CBMG). All of these stocks’ market caps are similar to BCRX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DJCO 2 466 -2
DRRX 9 48947 2
AUTL 13 22079 2
CBMG 3 14664 1
Average 6.75 21539 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $114 million in BCRX’s case. Autolus Therapeutics plc (NASDAQ:AUTL) is the most popular stock in this table. On the other hand Daily Journal Corporation (NASDAQ:DJCO) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on BCRX as the stock returned 128.5% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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