Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Here is What Hedge Funds Think About Tesaro Inc (TSRO)

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Tesaro Inc (NASDAQ:TSRO) from the perspective of those elite funds.

Is Tesaro Inc (NASDAQ:TSRO) a healthy stock for your portfolio? The best stock pickers are taking a bearish view. The number of long hedge fund positions went down by 4 in recent months. Our calculations also showed that TSRO isn’t among the 30 most popular stocks among hedge funds. TSRO was in 20 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with TSRO positions at the end of the previous quarter.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny

We’re going to take a look at the recent hedge fund action regarding Tesaro Inc (NASDAQ:TSRO).

What have hedge funds been doing with Tesaro Inc (NASDAQ:TSRO)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. By comparison, 34 hedge funds held shares or bullish call options in TSRO heading into this year. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

TSRO_dec2018

The largest stake in Tesaro Inc (NASDAQ:TSRO) was held by Camber Capital Management, which reported holding $136.5 million worth of stock at the end of September. It was followed by Millennium Management with a $60.9 million position. Other investors bullish on the company included Cormorant Asset Management, Balyasny Asset Management, and Rock Springs Capital Management.

Because Tesaro Inc (NASDAQ:TSRO) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of funds that elected to cut their full holdings by the end of the third quarter. It’s worth mentioning that Ori Hershkovitz’s Nexthera Capital dropped the biggest position of the 700 funds followed by Insider Monkey, totaling close to $19.3 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $16 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tesaro Inc (NASDAQ:TSRO) but similarly valued. We will take a look at Varonis Systems Inc (NASDAQ:VRNS), Covanta Holding Corporation (NYSE:CVA), Medpace Holdings, Inc. (NASDAQ:MEDP), and Travelport Worldwide Ltd (NYSE:TVPT). All of these stocks’ market caps are similar to TSRO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VRNS 22 153158 -4
CVA 19 104819 5
MEDP 26 286235 8
TVPT 23 253987 1
Average 22.5 199550 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $200 million. That figure was $375 million in TSRO’s case. Medpace Holdings, Inc. (NASDAQ:MEDP) is the most popular stock in this table. On the other hand Covanta Holding Corporation (NYSE:CVA) is the least popular one with only 19 bullish hedge fund positions. Tesaro Inc (NASDAQ:TSRO) 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. In this regard MEDP might be a better candidate to consider a long position.

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

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...