Is CHMA A Good Stock To Buy Now?

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 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Chiasma Inc (NASDAQ:CHMA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is CHMA a good stock to buy now? Chiasma Inc (NASDAQ:CHMA) was in 15 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. CHMA has experienced an increase in hedge fund interest in recent months. There were 14 hedge funds in our database with CHMA positions at the end of the second quarter. Our calculations also showed that CHMA 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 a lot of tools shareholders have at their disposal to assess publicly traded companies. Some of the most under-the-radar tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top hedge fund managers can beat the broader indices by a very impressive margin (see the details here).

Nathan Fischel DAFNA Capital

Nathan Fischel of DAFNA 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 let’s review the fresh hedge fund action encompassing Chiasma Inc (NASDAQ:CHMA).

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

At third quarter’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in CHMA over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

Among these funds, Adage Capital Management held the most valuable stake in Chiasma Inc (NASDAQ:CHMA), which was worth $21.1 million at the end of the third quarter. On the second spot was Rock Springs Capital Management which amassed $9.2 million worth of shares. Ikarian Capital, Point72 Asset Management, and Woodline Partners 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 Stonepine Capital allocated the biggest weight to Chiasma Inc (NASDAQ:CHMA), around 1.57% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, dishing out 0.51 percent of its 13F equity portfolio to CHMA.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Stonepine Capital, managed by Timothy P. Lynch, created the most outsized position in Chiasma Inc (NASDAQ:CHMA). Stonepine Capital had $1.5 million invested in the company at the end of the quarter. Nathan Fischel’s DAFNA Capital Management also made a $0.7 million investment in the stock during the quarter. The only other fund with a brand new CHMA position is Matthew Halbower’s Pentwater Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Chiasma Inc (NASDAQ:CHMA) but similarly valued. These stocks are Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI), NuZee, Inc. (NASDAQ:NUZE), Wrap Technologies, Inc. (NASDAQ:WRTC), Ciner Resources LP (NYSE:CINR), ChromaDex Corporation (NASDAQ:CDXC), Financial Institutions, Inc. (NASDAQ:FISI), and Franklin Covey Co. (NYSE:FC). This group of stocks’ market valuations are similar to CHMA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMPI 5 23436 5
NUZE 1 173 1
WRTC 4 5492 -3
CINR 1 2252 0
CDXC 6 2253 0
FISI 11 16276 0
FC 10 12289 -2
Average 5.4 8882 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $64 million in CHMA’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. Compared to these stocks Chiasma Inc (NASDAQ:CHMA) is more popular among hedge funds. Our overall hedge fund sentiment score for CHMA is 86. 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 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 December 14th and still beat the market by 15.8 percentage points. Unfortunately CHMA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CHMA were disappointed as the stock returned 5.6% since the end of the third quarter (through 12/14) 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.