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Hedge Funds Never Been Less Bullish On Marker Therapeutics, Inc. (MRKR)

In this article you are going to find out whether hedge funds think Marker Therapeutics, Inc. (NASDAQ:MRKR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Marker Therapeutics, Inc. (NASDAQ:MRKR) shareholders have witnessed a decrease in enthusiasm from smart money lately. MRKR was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with MRKR holdings at the end of the previous quarter. Our calculations also showed that MRKR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the recent hedge fund action surrounding Marker Therapeutics, Inc. (NASDAQ:MRKR).

What have hedge funds been doing with Marker Therapeutics, Inc. (NASDAQ:MRKR)?

Heading into the second quarter of 2020, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in MRKR a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the biggest position in Marker Therapeutics, Inc. (NASDAQ:MRKR). Baker Bros. Advisors has a $2.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $0.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and David Nguyen and Nancy Oh’s One68 Global Capital. In terms of the portfolio weights assigned to each position One68 Global Capital allocated the biggest weight to Marker Therapeutics, Inc. (NASDAQ:MRKR), around 0.49% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to MRKR.

Seeing as Marker Therapeutics, Inc. (NASDAQ:MRKR) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few funds who were dropping their positions entirely by the end of the first quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth close to $0.4 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dumped its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Marker Therapeutics, Inc. (NASDAQ:MRKR) but similarly valued. We will take a look at Chimerix Inc (NASDAQ:CMRX), ContraFect Corp (NASDAQ:CFRX), Fluent, Inc. (NASDAQ:FLNT), and Five Star Senior Living Inc. (NASDAQ:FVE). This group of stocks’ market valuations match MRKR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMRX 11 13139 2
CFRX 5 4605 -2
FLNT 7 996 -1
FVE 7 11825 5
Average 7.5 7641 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.5 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $3 million in MRKR’s case. Chimerix Inc (NASDAQ:CMRX) is the most popular stock in this table. On the other hand ContraFect Corp (NASDAQ:CFRX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Marker Therapeutics, Inc. (NASDAQ:MRKR) is even less popular than CFRX. 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 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on MRKR, though not to the same extent, as the stock returned 19.5% during the second quarter (through the end of May) and outperformed the market as well.

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