We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Ra Pharmaceuticals, Inc. (NASDAQ:RARX).
Is Ra Pharmaceuticals, Inc. (NASDAQ:RARX) ready to rally soon? Hedge funds are taking a bullish view. The number of long hedge fund positions advanced by 3 recently. Our calculations also showed that RARX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most shareholders, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are greater than 8000 funds in operation at the moment, Our researchers hone in on the upper echelon of this group, about 750 funds. These money managers watch over the majority of the smart money’s total capital, and by tracking their best picks, Insider Monkey has figured out many investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Peter Kolchinsky of RA Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the latest hedge fund action encompassing Ra Pharmaceuticals, Inc. (NASDAQ:RARX).
Hedge fund activity in Ra Pharmaceuticals, Inc. (NASDAQ:RARX)
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards RARX over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, RA Capital Management was the largest shareholder of Ra Pharmaceuticals, Inc. (NASDAQ:RARX), with a stake worth $114.9 million reported as of the end of September. Trailing RA Capital Management was Baker Bros. Advisors, which amassed a stake valued at $55.5 million. Deerfield Management, Rock Springs Capital Management, and Polar 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 RA Capital Management allocated the biggest weight to Ra Pharmaceuticals, Inc. (NASDAQ:RARX), around 6.85% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, earmarking 1.84 percent of its 13F equity portfolio to RARX.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, created the most outsized position in Ra Pharmaceuticals, Inc. (NASDAQ:RARX). Polar Capital had $15.3 million invested in the company at the end of the quarter. Samuel Isaly’s OrbiMed Advisors also initiated a $8.9 million position during the quarter. The following funds were also among the new RARX investors: Ken Griffin’s Citadel Investment Group, Joseph Edelman’s Perceptive Advisors, and David Harding’s Winton Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ra Pharmaceuticals, Inc. (NASDAQ:RARX) but similarly valued. These stocks are Career Education Corp. (NASDAQ:CECO), Tortoise Energy Infrastructure Corporation (NYSE:TYG), Theravance Biopharma Inc (NASDAQ:TBPH), and Neenah, Inc. (NYSE:NP). This group of stocks’ market valuations resemble RARX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CECO | 22 | 199757 | 0 |
| TYG | 1 | 764 | 0 |
| TBPH | 6 | 427868 | -2 |
| NP | 8 | 14953 | 1 |
| Average | 9.25 | 160836 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $321 million in RARX’s case. Career Education Corp. (NASDAQ:CECO) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 1 bullish hedge fund positions. Ra Pharmaceuticals, Inc. (NASDAQ:RARX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on RARX as the stock returned 97.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
