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Hedge Funds Souring On ProQR Therapeutics NV (PRQR)

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 821 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, a week after the market trough. In this article we look at what those investors think of ProQR Therapeutics NV (NASDAQ:PRQR).

ProQR Therapeutics NV (NASDAQ:PRQR) investors should be aware of a decrease in hedge fund interest recently. PRQR was in 8 hedge funds’ portfolios at the end of March. There were 11 hedge funds in our database with PRQR positions at the end of the previous quarter. Our calculations also showed that PRQR 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.

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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Phill Gross of Adage Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the new hedge fund action surrounding ProQR Therapeutics NV (NASDAQ:PRQR).

Hedge fund activity in ProQR Therapeutics NV (NASDAQ:PRQR)

At Q1’s end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PRQR over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is PRQR A Good Stock To Buy?

Among these funds, Adage Capital Management held the most valuable stake in ProQR Therapeutics NV (NASDAQ:PRQR), which was worth $25 million at the end of the third quarter. On the second spot was Aquilo Capital Management which amassed $13.2 million worth of shares. DAFNA Capital Management, Kerrisdale Capital, and Sphera Global Healthcare Fund 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 ProQR Therapeutics NV (NASDAQ:PRQR), around 5.14% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, designating 2.83 percent of its 13F equity portfolio to PRQR.

Judging by the fact that ProQR Therapeutics NV (NASDAQ:PRQR) has experienced falling interest from the smart money, it’s easy to see that there is a sect of hedgies that elected to cut their full holdings by the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest investment of the 750 funds tracked by Insider Monkey, worth an estimated $0.4 million in stock. Donald Sussman’s fund, Paloma Partners, also sold off its stock, about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to ProQR Therapeutics NV (NASDAQ:PRQR). We will take a look at RBB Bancorp (NASDAQ:RBB), Diebold Nixdorf Incorporated (NYSE:DBD), Golden Star Resources Ltd. (NYSE:GSS), and Movado Group, Inc (NYSE:MOV). This group of stocks’ market values resemble PRQR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RBB 10 6686 -1
DBD 17 59383 -4
GSS 6 8515 3
MOV 13 13616 1
Average 11.5 22050 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $50 million in PRQR’s case. Diebold Nixdorf Incorporated (NYSE:DBD) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (NYSE:GSS) is the least popular one with only 6 bullish hedge fund positions. ProQR Therapeutics NV (NASDAQ:PRQR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately PRQR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); PRQR investors were disappointed as the stock returned 4% during 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.

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