Hedge Funds Have Never Been This Bullish On Ocular Therapeutix Inc (OCUL)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Ocular Therapeutix Inc (NASDAQ:OCUL).

Ocular Therapeutix Inc (NASDAQ:OCUL) has experienced an increase in activity from the world’s largest hedge funds of late. Ocular Therapeutix Inc (NASDAQ:OCUL) was in 20 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 17 hedge funds in our database with OCUL holdings at the end of December. Our calculations also showed that OCUL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Now let’s take a glance at the new hedge fund action encompassing Ocular Therapeutix Inc (NASDAQ:OCUL).

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

At the end of March, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in OCUL a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, James A. Silverman’s Opaleye Management has the most valuable position in Ocular Therapeutix Inc (NASDAQ:OCUL), worth close to $106.3 million, comprising 15.6% of its total 13F portfolio. Sitting at the No. 2 spot is Two Sigma Advisors, managed by John Overdeck and David Siegel, which holds a $20.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Other peers that hold long positions comprise Jeffrey Jay and David Kroin’s Great Point Partners, Peter Kolchinsky’s RA Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Opaleye Management allocated the biggest weight to Ocular Therapeutix Inc (NASDAQ:OCUL), around 15.62% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, setting aside 3.42 percent of its 13F equity portfolio to OCUL.

As one would reasonably expect, key money managers were breaking ground themselves. Rubric Capital Management, managed by David Rosen, created the most valuable position in Ocular Therapeutix Inc (NASDAQ:OCUL). Rubric Capital Management had $6.3 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $3.2 million position during the quarter. The following funds were also among the new OCUL investors: Hal Mintz’s Sabby Capital, Dmitry Balyasny’s Balyasny Asset Management, and Jonathan Soros’s JS Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Ocular Therapeutix Inc (NASDAQ:OCUL) but similarly valued. We will take a look at NetGear, Inc. (NASDAQ:NTGR), 1st Source Corporation (NASDAQ:SRCE), Premier Financial Corp. (NASDAQ:PFC), Translate Bio, Inc. (NASDAQ:TBIO), Sculptor Capital Management, Inc. (NYSE:SCU), First Bancorp (NASDAQ:FBNC), and Getty Realty Corp. (NYSE:GTY). This group of stocks’ market values match OCUL’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NTGR 16 38222 -1
SRCE 8 21273 -5
PFC 10 74166 -1
TBIO 20 397596 0
SCU 17 90518 0
FBNC 13 23302 0
GTY 10 55107 -2
Average 13.4 100026 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $202 million in OCUL’s case. Translate Bio, Inc. (NASDAQ:TBIO) is the most popular stock in this table. On the other hand 1st Source Corporation (NASDAQ:SRCE) is the least popular one with only 8 bullish hedge fund positions. Ocular Therapeutix Inc (NASDAQ:OCUL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OCUL is 88. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately OCUL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OCUL were disappointed as the stock returned -25.6% since the end of March (through 7/16) 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.