The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Chimerix Inc (NASDAQ:CMRX).
Is CMRX a good stock to buy now? Hedge funds were in a bullish mood. The number of bullish hedge fund bets moved up by 1 recently. Chimerix Inc (NASDAQ:CMRX) was in 14 hedge funds’ portfolios at the end of September. The all time high for this statistic is 17. Our calculations also showed that CMRX 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 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 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 check out the recent hedge fund action encompassing Chimerix Inc (NASDAQ:CMRX).
Do Hedge Funds Think CMRX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CMRX over the last 21 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Opaleye Management held the most valuable stake in Chimerix Inc (NASDAQ:CMRX), which was worth $9.6 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $7.3 million worth of shares. Ikarian Capital, Two Sigma Advisors, and D E Shaw 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 Opaleye Management allocated the biggest weight to Chimerix Inc (NASDAQ:CMRX), around 1.87% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, dishing out 0.37 percent of its 13F equity portfolio to CMRX.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Ikarian Capital, managed by Neil Shahrestani, created the biggest position in Chimerix Inc (NASDAQ:CMRX). Ikarian Capital had $3.4 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $0.5 million position during the quarter. The other funds with brand new CMRX positions are Mark Hart III’s Corriente Advisors and Peter Algert’s Algert Global.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chimerix Inc (NASDAQ:CMRX) but similarly valued. These stocks are Central Valley Community Bancorp (NASDAQ:CVCY), Smith Micro Software, Inc. (NASDAQ:SMSI), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Ames National Corporation (NASDAQ:ATLO), Steel Partners Holdings LP (NYSE:SPLP), VolitionRX Limited (NYSE:VNRX), and Fennec Pharmaceuticals Inc. (NASDAQ:FENC). This group of stocks’ market valuations match CMRX’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.7 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $27 million in CMRX’s case. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) is the most popular stock in this table. On the other hand VolitionRX Limited (NYSE:VNRX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Chimerix Inc (NASDAQ:CMRX) is more popular among hedge funds. Our overall hedge fund sentiment score for CMRX is 80.7. 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 returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on CMRX as the stock returned 104.8% since the end of September (through 12/8) 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.
Disclosure: None. This article was originally published at Insider Monkey.