With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Array Biopharma Inc (NASDAQ:ARRY).
Is ARRY a good stock to buy? Array Biopharma Inc (NASDAQ:ARRY) has experienced an increase in activity from the world’s largest hedge funds lately. Array Biopharma Inc (NASDAQ:ARRY) was in 30 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ARRY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let’s view the new hedge fund action regarding Array Biopharma Inc (NASDAQ:ARRY).
Do Hedge Funds Think ARRY Is A Good Stock To Buy Now?
At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in ARRY 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 Array Biopharma Inc (NASDAQ:ARRY) was held by Zimmer Partners, which reported holding $153.8 million worth of stock at the end of December. It was followed by Adage Capital Management with a $83.5 million position. Other investors bullish on the company included Millennium Management, Encompass Capital Advisors, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Encompass Capital Advisors allocated the biggest weight to Array Biopharma Inc (NASDAQ:ARRY), around 2.39% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, setting aside 2.09 percent of its 13F equity portfolio to ARRY.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Islet Management, managed by Joseph Samuels, created the biggest position in Array Biopharma Inc (NASDAQ:ARRY). Islet Management had $20.2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $13.5 million position during the quarter. The following funds were also among the new ARRY investors: Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Simon Sadler’s Segantii Capital, and Ira Unschuld’s Brant Point Investment Management.
Let’s check out hedge fund activity in other stocks similar to Array Biopharma Inc (NASDAQ:ARRY). We will take a look at CONMED Corporation (NASDAQ:CNMD), Wingstop Inc (NASDAQ:WING), Tenable Holdings, Inc. (NASDAQ:TENB), Advantage Solutions Inc. (NASDAQ:ADV), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), GoHealth, Inc. (NASDAQ:GOCO), and Kinsale Capital Group, Inc. (NASDAQ:KNSL). This group of stocks’ market valuations are closest to ARRY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNMD | 23 | 236802 | -5 |
| WING | 23 | 233958 | -5 |
| TENB | 32 | 532519 | -7 |
| ADV | 24 | 605969 | 5 |
| AJRD | 30 | 786292 | -6 |
| GOCO | 17 | 549530 | -1 |
| KNSL | 17 | 49810 | 0 |
| Average | 23.7 | 427840 | -2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $428 million. That figure was $486 million in ARRY’s case. Tenable Holdings, Inc. (NASDAQ:TENB) is the most popular stock in this table. On the other hand GoHealth, Inc. (NASDAQ:GOCO) is the least popular one with only 17 bullish hedge fund positions. Array Biopharma Inc (NASDAQ:ARRY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARRY is 79.3. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately ARRY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ARRY were disappointed as the stock returned -47% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Array Biopharma Inc (NASDAQ:ARRY)
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Disclosure: None. This article was originally published at Insider Monkey.
