Hedge Funds Have Never Been This Bullish On Fate Therapeutics Inc (FATE)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 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 March 31st. In this article we look at what those investors think of Fate Therapeutics Inc (NASDAQ:FATE).

Fate Therapeutics Inc (NASDAQ:FATE) investors should be aware of an increase in hedge fund interest of late. Fate Therapeutics Inc (NASDAQ:FATE) was in 39 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 34 hedge funds in our database with FATE positions at the end of the fourth quarter. Our calculations also showed that FATE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you’d ask most traders, hedge funds are seen as slow, outdated investment tools of the past. While there are over 8000 funds trading today, Our experts look at the bigwigs of this club, approximately 850 funds. These money managers watch over the majority of all hedge funds’ total capital, and by shadowing their highest performing stock picks, Insider Monkey has discovered a few investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a gander at the key hedge fund action encompassing Fate Therapeutics Inc (NASDAQ:FATE).

Do Hedge Funds Think FATE Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in FATE a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Is FATE A Good Stock To Buy?

Among these funds, Redmile Group held the most valuable stake in Fate Therapeutics Inc (NASDAQ:FATE), which was worth $1068.3 million at the end of the fourth quarter. On the second spot was ARK Investment Management which amassed $540.4 million worth of shares. Casdin Capital, Farallon Capital, and Lone Pine Capital 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 Darwin Global Management allocated the biggest weight to Fate Therapeutics Inc (NASDAQ:FATE), around 22.12% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, setting aside 15.05 percent of its 13F equity portfolio to FATE.

Now, specific money managers have been driving this bullishness. Woodline Partners, managed by Michael Rockefeller and KarláKroeker, initiated the largest position in Fate Therapeutics Inc (NASDAQ:FATE). Woodline Partners had $10.4 million invested in the company at the end of the quarter. Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management also made a $5.8 million investment in the stock during the quarter. The following funds were also among the new FATE investors: Bhagwan Jay Rao’s Integral Health Asset Management, Greg Eisner’s Engineers Gate Manager, and Israel Englander’s Millennium Management.

Let’s now take a look at hedge fund activity in other stocks similar to Fate Therapeutics Inc (NASDAQ:FATE). These stocks are Fastly, Inc. (NYSE:FSLY), Performance Food Group Company (NYSE:PFGC), Capri Holdings Limited (NYSE:CPRI), AutoNation, Inc. (NYSE:AN), Western Midstream Partners, LP (NYSE:WES), Kilroy Realty Corp (NYSE:KRC), and Ultragenyx Pharmaceutical Inc (NASDAQ:RARE). This group of stocks’ market caps resemble FATE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FSLY 26 1323528 -6
PFGC 18 330563 -4
CPRI 47 909126 5
AN 24 585168 1
WES 8 127464 -2
KRC 27 328922 2
RARE 25 588066 -1
Average 25 598977 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $599 million. That figure was $2635 million in FATE’s case. Capri Holdings Limited (NYSE:CPRI) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 8 bullish hedge fund positions. Fate Therapeutics Inc (NASDAQ:FATE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FATE is 79.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately FATE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FATE were disappointed as the stock returned 2.5% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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