Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Precision BioSciences, Inc. (NASDAQ:DTIL) in this article.
Is DTIL a good stock to buy now? Precision BioSciences, Inc. (NASDAQ:DTIL) investors should be aware of an increase in hedge fund interest in recent months. Precision BioSciences, Inc. (NASDAQ:DTIL) was in 14 hedge funds’ portfolios at the end of September. 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. There were 12 hedge funds in our database with DTIL positions at the end of the second quarter. Our calculations also showed that DTIL 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. Now we’re going to analyze the key hedge fund action surrounding Precision BioSciences, Inc. (NASDAQ:DTIL).
Do Hedge Funds Think DTIL Is A Good Stock To Buy Now?
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in DTIL over the last 21 quarters. 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, Sio Capital was the largest shareholder of Precision BioSciences, Inc. (NASDAQ:DTIL), with a stake worth $2.2 million reported as of the end of September. Trailing Sio Capital was Cormorant Asset Management, which amassed a stake valued at $2.1 million. Integral Health Asset Management, Point72 Asset Management, and Two Sigma Advisors 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 Integral Health Asset Management allocated the biggest weight to Precision BioSciences, Inc. (NASDAQ:DTIL), around 0.57% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, earmarking 0.43 percent of its 13F equity portfolio to DTIL.
Consequently, specific money managers have been driving this bullishness. Integral Health Asset Management, managed by Bhagwan Jay Rao, created the most outsized position in Precision BioSciences, Inc. (NASDAQ:DTIL). Integral Health Asset Management had $1.8 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.6 million position during the quarter. The following funds were also among the new DTIL investors: D. E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks similar to Precision BioSciences, Inc. (NASDAQ:DTIL). These stocks are Oportun Financial Corporation (NASDAQ:OPRT), Artesian Resources Corporation (NASDAQ:ARTNA), Aspira Women’s Health Inc. (NASDAQ:AWH), Whole Earth Brands, Inc. (NASDAQ:FREE), Allot Ltd. (NASDAQ:ALLT), Avadel Pharmaceuticals plc (NASDAQ:AVDL), and First Community Bancshares Inc (NASDAQ:FCBC). All of these stocks’ market caps are closest to DTIL’s market cap.
|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 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $14 million in DTIL’s case. Whole Earth Brands, Inc. (NASDAQ:FREE) is the most popular stock in this table. On the other hand Artesian Resources Corporation (NASDAQ:ARTNA) is the least popular one with only 1 bullish hedge fund positions. Precision BioSciences, Inc. (NASDAQ:DTIL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DTIL is 68. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on DTIL as the stock returned 22.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.