Is CALT A Good Stock To Buy Now?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Calliditas Therapeutics AB (publ) (NASDAQ:CALT) to find out whether there were any major changes in hedge funds’ views.

Is CALT a good stock to buy now? Calliditas Therapeutics AB (publ) (NASDAQ:CALT) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 12. CALT investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 12 hedge funds in our database with CALT positions at the end of the second quarter. Our calculations also showed that CALT 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.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Lei Zhang Hillhouse Capital

Lei Zhang of Hillhouse Capital Management

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. Keeping this in mind we’re going to take a peek at the recent hedge fund action regarding Calliditas Therapeutics AB (publ) (NASDAQ:CALT).

Do Hedge Funds Think CALT Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the second quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in CALT 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.

Among these funds, Biotechnology Value Fund / BVF Inc held the most valuable stake in Calliditas Therapeutics AB (publ) (NASDAQ:CALT), which was worth $18 million at the end of the third quarter. On the second spot was Vivo Capital which amassed $13.9 million worth of shares. Logos Capital, Hillhouse Capital Management, and Point72 Asset Management 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 Logos Capital allocated the biggest weight to Calliditas Therapeutics AB (publ) (NASDAQ:CALT), around 1.74% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, dishing out 0.98 percent of its 13F equity portfolio to CALT.

Judging by the fact that Calliditas Therapeutics AB (publ) (NASDAQ:CALT) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers who sold off their entire stakes last quarter. At the top of the heap, Anand Parekh’s Alyeska Investment Group cut the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling about $2.3 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $1.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Calliditas Therapeutics AB (publ) (NASDAQ:CALT). These stocks are Accelerate Diagnostics Inc (NASDAQ:AXDX), Amyris Inc (NASDAQ:AMRS), Meredith Corporation (NYSE:MDP), Cara Therapeutics Inc (NASDAQ:CARA), Passage Bio, Inc. (NASDAQ:PASG), 3D Systems Corporation (NYSE:DDD), and Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI). This group of stocks’ market caps are closest to CALT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AXDX 13 31316 0
AMRS 11 124955 -5
MDP 18 162681 -2
CARA 19 75686 1
PASG 15 221636 2
DDD 15 33448 -3
SPPI 13 57477 3
Average 14.9 101028 -0.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $66 million in CALT’s case. Cara Therapeutics Inc (NASDAQ:CARA) is the most popular stock in this table. On the other hand Amyris Inc (NASDAQ:AMRS) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Calliditas Therapeutics AB (publ) (NASDAQ:CALT) is even less popular than AMRS. Our overall hedge fund sentiment score for CALT is 31.5. 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. Hedge funds clearly dropped the ball on CALT as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on CALT as the stock returned 44.6% since Q3 (through December 8th) and outperformed the market by an even larger margin.

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