The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is CERE a good stock to buy? Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of March. Our calculations also showed that CERE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare CERE to other stocks including Core-Mark Holding Company, Inc. (NASDAQ:CORE), CBIZ, Inc. (NYSE:CBZ), and Argo Group International Holdings, Ltd. (NYSE:ARGO) to get a better sense of its popularity.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. Now we’re going to check out the new hedge fund action encompassing Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE).
Do Hedge Funds Think CERE Is A Good Stock To Buy Now?
At first quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CERE a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Joseph Edelman’s Perceptive Advisors has the most valuable position in Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE), worth close to $63.7 million, corresponding to 0.8% of its total 13F portfolio. Coming in second is RA Capital Management, led by Peter Kolchinsky, holding a $30.2 million position; 0.5% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism encompass Panayotis Takis Sparaggis’s Alkeon Capital Management, Ken Griffin’s Citadel Investment Group and Anand Parekh’s Alyeska Investment Group. In terms of the portfolio weights assigned to each position Sphera Global Healthcare Fund allocated the biggest weight to Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE), around 0.96% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, designating 0.81 percent of its 13F equity portfolio to CERE.
Judging by the fact that Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) has experienced a decline in interest from the smart money, we can see that there is a sect of hedge funds that slashed their entire stakes in the first quarter. Intriguingly, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management sold off the biggest position of the 750 funds followed by Insider Monkey, comprising about $11.4 million in stock. Oleg Nodelman’s fund, EcoR1 Capital, also sold off its stock, about $6.6 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE). We will take a look at Core-Mark Holding Company, Inc. (NASDAQ:CORE), CBIZ, Inc. (NYSE:CBZ), Argo Group International Holdings, Ltd. (NYSE:ARGO), Kaiser Aluminum Corp. (NASDAQ:KALU), Workhorse Group, Inc. (NASDAQ:WKHS), Sykes Enterprises, Incorporated (NASDAQ:SYKE), and Air Transport Services Group Inc. (NASDAQ:ATSG). This group of stocks’ market caps are similar to CERE’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $210 million in CERE’s case. Air Transport Services Group Inc. (NASDAQ:ATSG) is the most popular stock in this table. On the other hand CBIZ, Inc. (NYSE:CBZ) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) is more popular among hedge funds. Our overall hedge fund sentiment score for CERE is 85. 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. 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 returned 23.8% in 2021 through July 16th but still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on CERE as the stock returned 54.8% since the end of March (through 7/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.