Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of CM Life Sciences, Inc. (NASDAQ:CMLFU).
CM Life Sciences, Inc. (NASDAQ:CMLFU) was in 6 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 24. CMLFU has seen a decrease in activity from the world’s largest hedge funds lately. There were 12 hedge funds in our database with CMLFU holdings at the end of December. Our calculations also showed that CMLFU 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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. 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 let’s view the new hedge fund action regarding CM Life Sciences, Inc. (NASDAQ:CMLFU).
Do Hedge Funds Think CMLFU Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -50% from the fourth quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in CMLFU a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Berylson Capital Partners was the largest shareholder of CM Life Sciences, Inc. (NASDAQ:CMLFU), with a stake worth $16.5 million reported as of the end of March. Trailing Berylson Capital Partners was Islet Management, which amassed a stake valued at $10.3 million. BlueCrest Capital Mgmt., Magnetar Capital, and Arrow Capital 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 Berylson Capital Partners allocated the biggest weight to CM Life Sciences, Inc. (NASDAQ:CMLFU), around 4% of its 13F portfolio. Arrow Capital Management is also relatively very bullish on the stock, setting aside 1.18 percent of its 13F equity portfolio to CMLFU.
Because CM Life Sciences, Inc. (NASDAQ:CMLFU) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds who were dropping their entire stakes by the end of the first quarter. Interestingly, Scott Ferguson’s Sachem Head Capital cut the largest investment of all the hedgies monitored by Insider Monkey, valued at an estimated $40.2 million in stock. D. E. Shaw’s fund, D E Shaw, also cut its stock, about $17.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 6 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks similar to CM Life Sciences, Inc. (NASDAQ:CMLFU). These stocks are Bryn Mawr Bank Corp. (NASDAQ:BMTC), Tellurian Inc. (NASDAQ:TELL), National Western Life Group Inc. (NASDAQ:NWLI), Oric Pharmaceuticals, Inc. (NASDAQ:ORIC), Apollo Investment Corp. (NASDAQ:AINV), Washington Trust Bancorp (NASDAQ:WASH), and Pharvaris N.V. (NASDAQ:PHVS). This group of stocks’ market values resemble CMLFU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMTC | 12 | 46863 | -5 |
| TELL | 12 | 28482 | 5 |
| NWLI | 8 | 13057 | 1 |
| ORIC | 13 | 259300 | -1 |
| AINV | 11 | 39349 | 1 |
| WASH | 7 | 24082 | -3 |
| PHVS | 11 | 137080 | 11 |
| Average | 10.6 | 78316 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $37 million in CMLFU’s case. Oric Pharmaceuticals, Inc. (NASDAQ:ORIC) is the most popular stock in this table. On the other hand Washington Trust Bancorp (NASDAQ:WASH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks CM Life Sciences, Inc. (NASDAQ:CMLFU) is even less popular than WASH. Our overall hedge fund sentiment score for CMLFU is 6.5. 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 dodged a bullet by taking a bearish stance towards CMLFU. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately CMLFU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); CMLFU investors were disappointed as the stock returned -13.4% since the end of the first quarter (through 6/25) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.