In this article we will take a look at whether hedge funds think IDEAYA Biosciences, Inc. (NASDAQ:IDYA) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
IDEAYA Biosciences, Inc. (NASDAQ:IDYA) investors should be aware of a decrease in enthusiasm from smart money lately. IDYA was in 6 hedge funds’ portfolios at the end of March. There were 9 hedge funds in our database with IDYA holdings at the end of the previous quarter. Our calculations also showed that IDYA 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 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.
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. With all of this in mind we’re going to take a peek at the new hedge fund action regarding IDEAYA Biosciences, Inc. (NASDAQ:IDYA).
What have hedge funds been doing with IDEAYA Biosciences, Inc. (NASDAQ:IDYA)?
Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in IDYA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of IDEAYA Biosciences, Inc. (NASDAQ:IDYA), with a stake worth $5.3 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Perceptive Advisors, which amassed a stake valued at $4.7 million. Point72 Asset Management, Driehaus Capital, and Baker Bros. Advisors 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to IDEAYA Biosciences, Inc. (NASDAQ:IDYA), around 0.49% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, earmarking 0.12 percent of its 13F equity portfolio to IDYA.
Since IDEAYA Biosciences, Inc. (NASDAQ:IDYA) has witnessed bearish sentiment from hedge fund managers, it’s safe to say that there was a specific group of funds who sold off their entire stakes heading into Q4. Intriguingly, David Nguyen and Nancy Oh’s One68 Global Capital cut the largest investment of all the hedgies monitored by Insider Monkey, totaling an estimated $0.2 million in stock, and Ari Zweiman’s 683 Capital Partners was right behind this move, as the fund said goodbye to about $0.2 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to IDEAYA Biosciences, Inc. (NASDAQ:IDYA). These stocks are HireQuest, Inc. (NASDAQ:HQI), Tanzanian Royalty Exploration Corp. (US) (NYSE:TRX), TravelCenters of America LLC (NYSE:TA), and Calumet Specialty Products Partners, L.P (NASDAQ:CLMT). This group of stocks’ market values resemble IDYA’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $12 million in IDYA’s case. TravelCenters of America LLC (NYSE:TA) is the most popular stock in this table. On the other hand Tanzanian Royalty Exploration Corp. (US) (NYSE:TRX) is the least popular one with only 1 bullish hedge fund positions. IDEAYA Biosciences, Inc. (NASDAQ:IDYA) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on IDYA as the stock returned 107.8% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.