Hedge Funds Have Never Been This Bullish On CymaBay Therapeutics Inc (CBAY)

Does CymaBay Therapeutics Inc (NASDAQ:CBAY) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Is CymaBay Therapeutics Inc (NASDAQ:CBAY) a buy here? The smart money is in a bullish mood. The number of bullish hedge fund positions moved up by 4 in recent months. Our calculations also showed that CBAY isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jim Tananbaum - Foresite Capital

We’re going to check out the recent hedge fund action surrounding CymaBay Therapeutics Inc (NASDAQ:CBAY).

How have hedgies been trading CymaBay Therapeutics Inc (NASDAQ:CBAY)?

Heading into the first quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in CBAY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


Among these funds, Baker Bros. Advisors held the most valuable stake in CymaBay Therapeutics Inc (NASDAQ:CBAY), which was worth $38.7 million at the end of the fourth quarter. On the second spot was Redmile Group which amassed $23.2 million worth of shares. Moreover, Perceptive Advisors, Adage Capital Management, and Foresite Capital were also bullish on CymaBay Therapeutics Inc (NASDAQ:CBAY), allocating a large percentage of their portfolios to this stock.

Now, key money managers were leading the bulls’ herd. Great Point Partners, managed by Jeffrey Jay and David Kroin, established the biggest position in CymaBay Therapeutics Inc (NASDAQ:CBAY). Great Point Partners had $11.2 million invested in the company at the end of the quarter. Albert Cha and Frank Kung’s Vivo Capital also initiated a $7.1 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Michael Castor’s Sio Capital, and Thomas Bailard’s Bailard Inc.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as CymaBay Therapeutics Inc (NASDAQ:CBAY) but similarly valued. These stocks are Front Yard Residential Corporation (NYSE:RESI), Natural Resource Partners LP (NYSE:NRP), American Public Education, Inc. (NASDAQ:APEI), and Ethan Allen Interiors Inc. (NYSE:ETH). This group of stocks’ market caps are similar to CBAY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RESI 13 24911 -2
NRP 4 8080 -1
APEI 16 76944 3
ETH 15 58548 3
Average 12 42121 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $187 million in CBAY’s case. American Public Education, Inc. (NASDAQ:APEI) is the most popular stock in this table. On the other hand Natural Resource Partners LP (NYSE:NRP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks CymaBay Therapeutics Inc (NASDAQ:CBAY) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on CBAY as the stock returned 53.1% 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.

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