The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) an exceptional investment right now? Money managers were taking a bullish view. The number of long hedge fund positions improved by 10 in recent months. Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) was in 35 hedge funds’ portfolios at the end of June. The all time high for this statistics is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DRNA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 25 hedge funds in our database with DRNA positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are perceived as unimportant, outdated financial vehicles of the past. While there are over 8000 funds trading at present, Our researchers choose to focus on the top tier of this club, around 850 funds. Most estimates calculate that this group of people oversee bulk of the smart money’s total asset base, and by tracking their finest stock picks, Insider Monkey has brought to light a few investment strategies that have historically surpassed Mr. Market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. Legal marijuana is one of the fastest growing industries right now, so we are also checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to check out the recent hedge fund action surrounding Dicerna Pharmaceuticals Inc (NASDAQ:DRNA).
How have hedgies been trading Dicerna Pharmaceuticals Inc (NASDAQ:DRNA)?
At second quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from one quarter earlier. By comparison, 16 hedge funds held shares or bullish call options in DRNA a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, EcoR1 Capital was the largest shareholder of Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), with a stake worth $69.1 million reported as of the end of September. Trailing EcoR1 Capital was Bridger Management, which amassed a stake valued at $37.4 million. Aquilo Capital Management, Driehaus Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), around 7.45% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, setting aside 5.11 percent of its 13F equity portfolio to DRNA.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Perceptive Advisors, managed by Joseph Edelman, created the largest position in Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). Perceptive Advisors had $20.3 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $5.3 million position during the quarter. The following funds were also among the new DRNA investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Andre F. Perold’s HighVista Strategies, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s now review hedge fund activity in other stocks similar to Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). We will take a look at EVO Payments, Inc. (NASDAQ:EVOP), Atlas Corp. (NYSE:ATCO), SciPlay Corporation (NASDAQ:SCPL), BankUnited Inc (NYSE:BKU), Nelnet, Inc. (NYSE:NNI), Simmons First National Corporation (NASDAQ:SFNC), and Cantel Medical Corp. (NYSE:CMD). All of these stocks’ market caps resemble DRNA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $342 million in DRNA’s case. SciPlay Corporation (NASDAQ:SCPL) is the most popular stock in this table. On the other hand Atlas Corp. (NYSE:ATCO) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) is more popular among hedge funds. Our overall hedge fund sentiment score for DRNA is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately DRNA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on DRNA were disappointed as the stock returned -27.1% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.