In this article we will check out the progression of hedge fund sentiment towards Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Checkmate Pharmaceuticals (CMPI) a good stock to buy now? Prominent investors were betting on the stock. The number of bullish hedge fund bets increased by 5 recently. Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that CMPI 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.
To the average investor there are numerous tools stock market investors have at their disposal to appraise their holdings. Two of the most useful tools are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outclass their index-focused peers by a superb margin (see the details here).
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 take a peek at the recent hedge fund action encompassing Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI).
What does smart money think about Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CMPI 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.
More specifically, Clough Capital Partners was the largest shareholder of Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI), with a stake worth $14.9 million reported as of the end of September. Trailing Clough Capital Partners was Sectoral Asset Management, which amassed a stake valued at $6.9 million. Millennium Management, Zimmer Partners, and Moore Global Investments 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 Clough Capital Partners allocated the biggest weight to Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI), around 1.07% of its 13F portfolio. Sectoral Asset Management is also relatively very bullish on the stock, dishing out 0.59 percent of its 13F equity portfolio to CMPI.
As one would reasonably expect, some big names were breaking ground themselves. Clough Capital Partners, managed by Charles Clough, assembled the most outsized position in Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI). Clough Capital Partners had $14.9 million invested in the company at the end of the quarter. Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management also made a $6.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Stuart J. Zimmer’s Zimmer Partners, and Louis Bacon’s Moore Global Investments.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) but similarly valued. These stocks are NuZee, Inc. (NASDAQ:NUZE), Wrap Technologies, Inc. (NASDAQ:WRTC), Ciner Resources LP (NYSE:CINR), ChromaDex Corporation (NASDAQ:CDXC), Financial Institutions, Inc. (NASDAQ:FISI), Franklin Covey Co. (NYSE:FC), and Investors Title Company (NASDAQ:ITIC). This group of stocks’ market valuations resemble CMPI’s market valuation.
|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 5.6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $23 million in CMPI’s case. Financial Institutions, Inc. (NASDAQ:FISI) is the most popular stock in this table. On the other hand NuZee, Inc. (NASDAQ:NUZE) is the least popular one with only 1 bullish hedge fund positions. Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for CMPI is 42. 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 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately CMPI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); CMPI investors were disappointed as the stock returned 0.7% since the end of September (through 11/27) 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.
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Disclosure: None. This article was originally published at Insider Monkey.