At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Intellia Therapeutics, Inc. (NASDAQ:NTLA) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Is Intellia Therapeutics, Inc. (NASDAQ:NTLA) worth your attention right now? The smart money was selling. The number of long hedge fund bets went down by 3 recently. Our calculations also showed that NTLA 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). NTLA was in 10 hedge funds’ portfolios at the end of March. There were 13 hedge funds in our database with NTLA holdings at the end of the previous quarter.
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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. 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. Now we’re going to go over the new hedge fund action encompassing Intellia Therapeutics, Inc. (NASDAQ:NTLA).
What does smart money think about Intellia Therapeutics, Inc. (NASDAQ:NTLA)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the previous quarter. By comparison, 10 hedge funds held shares or bullish call options in NTLA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Intellia Therapeutics, Inc. (NASDAQ:NTLA) was held by Citadel Investment Group, which reported holding $11 million worth of stock at the end of September. It was followed by OrbiMed Advisors with a $3.2 million position. Other investors bullish on the company included Two Sigma Advisors, Ikarian Capital, and Baker Bros. Advisors. In terms of the portfolio weights assigned to each position Ikarian Capital allocated the biggest weight to Intellia Therapeutics, Inc. (NASDAQ:NTLA), around 0.17% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.1 percent of its 13F equity portfolio to NTLA.
Since Intellia Therapeutics, Inc. (NASDAQ:NTLA) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of fund managers that slashed their positions entirely last quarter. Intriguingly, Renaissance Technologies sold off the largest position of all the hedgies followed by Insider Monkey, valued at about $0.5 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Intellia Therapeutics, Inc. (NASDAQ:NTLA). We will take a look at Franklin Street Properties Corp. (NYSE:FSP), National Western Life Group Inc. (NASDAQ:NWLI), MSG Networks Inc (NYSE:MSGN), and FB Financial Corporation (NYSE:FBK). All of these stocks’ market caps are similar to NTLA’s market cap.
|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 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $25 million in NTLA’s case. MSG Networks Inc (NYSE:MSGN) is the most popular stock in this table. On the other hand Franklin Street Properties Corp. (NYSE:FSP) is the least popular one with only 5 bullish hedge fund positions. Intellia Therapeutics, Inc. (NASDAQ:NTLA) is not the least popular stock in this group but hedge fund interest is still below 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on NTLA as the stock returned 71.9% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.