Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Akero Therapeutics, Inc. (NASDAQ:AKRO) in this article.
Is AKRO a good stock to buy now? Akero Therapeutics, Inc. (NASDAQ:AKRO) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Akero Therapeutics, Inc. (NASDAQ:AKRO) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 15. There were 13 hedge funds in our database with AKRO positions at the end of the second quarter. Our calculations also showed that AKRO isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 eyes of most market participants, hedge funds are perceived as worthless, old financial tools of years past. While there are more than 8000 funds trading today, Our researchers look at the moguls of this group, approximately 850 funds. These hedge fund managers have their hands on the lion’s share of the hedge fund industry’s total asset base, and by watching their inimitable equity investments, Insider Monkey has found various investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to analyze the key hedge fund action encompassing Akero Therapeutics, Inc. (NASDAQ:AKRO).
Do Hedge Funds Think AKRO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2020. By comparison, 10 hedge funds held shares or bullish call options in AKRO a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Redmile Group was the largest shareholder of Akero Therapeutics, Inc. (NASDAQ:AKRO), with a stake worth $71.9 million reported as of the end of September. Trailing Redmile Group was Alkeon Capital Management, which amassed a stake valued at $70.2 million. Hillhouse Capital Management, Cormorant Asset Management, and Vivo Capital 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 Redmile Group allocated the biggest weight to Akero Therapeutics, Inc. (NASDAQ:AKRO), around 1.32% of its 13F portfolio. Cormorant Asset Management is also relatively very bullish on the stock, dishing out 1.02 percent of its 13F equity portfolio to AKRO.
As aggregate interest increased, some big names have been driving this bullishness. Baker Bros. Advisors, managed by Julian Baker and Felix Baker, established the most outsized position in Akero Therapeutics, Inc. (NASDAQ:AKRO). Baker Bros. Advisors had $4.1 million invested in the company at the end of the quarter. Bhagwan Jay Rao’s Integral Health Asset Management also made a $2.6 million investment in the stock during the quarter. The following funds were also among the new AKRO investors: Joseph Edelman’s Perceptive Advisors and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Akero Therapeutics, Inc. (NASDAQ:AKRO) but similarly valued. These stocks are Gol Linhas Aereas Inteligentes SA (NYSE:GOL), Central European Media Enterprises Ltd. (NASDAQ:CETV), Community Healthcare Trust Inc (NYSE:CHCT), Virtus Investment Partners Inc (NASDAQ:VRTS), Evolent Health Inc (NYSE:EVH), Quanterix Corporation (NASDAQ:QTRX), and Innoviva, Inc. (NASDAQ:INVA). This group of stocks’ market valuations match AKRO’s market valuation.
|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 14 hedge funds with bullish positions and the average amount invested in these stocks was $110 million. That figure was $270 million in AKRO’s case. Innoviva, Inc. (NASDAQ:INVA) is the most popular stock in this table. On the other hand Gol Linhas Aereas Inteligentes SA (NYSE:GOL) is the least popular one with only 10 bullish hedge fund positions. Akero Therapeutics, Inc. (NASDAQ:AKRO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AKRO is 52.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately AKRO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); AKRO investors were disappointed as the stock returned -7.9% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.