Is ETNB A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of 89bio, Inc. (NASDAQ:ETNB) based on that data.

Is ETNB a good stock to buy now? 89bio, Inc. (NASDAQ:ETNB) investors should be aware of an increase in hedge fund interest lately. 89bio, Inc. (NASDAQ:ETNB) was in 20 hedge funds’ portfolios at the end of September. The all time high for this statistic is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 6 hedge funds in our database with ETNB positions at the end of the second quarter. Our calculations also showed that ETNB 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To most market participants, hedge funds are assumed to be worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, Our researchers hone in on the bigwigs of this club, approximately 850 funds. Most estimates calculate that this group of people direct the lion’s share of all hedge funds’ total capital, and by monitoring their inimitable investments, Insider Monkey has unsheathed a few investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Peter Kolchinsky of RA 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. With all of this in mind we’re going to check out the recent hedge fund action regarding 89bio, Inc. (NASDAQ:ETNB).

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

Heading into the fourth quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 233% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ETNB 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.

Is ETNB A Good Stock To Buy?

More specifically, RA Capital Management was the largest shareholder of 89bio, Inc. (NASDAQ:ETNB), with a stake worth $121.5 million reported as of the end of September. Trailing RA Capital Management was OrbiMed Advisors, which amassed a stake valued at $95.7 million. Acuta Capital Partners, Ikarian Capital, and Vivo Capital 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 Acuta Capital Partners allocated the biggest weight to 89bio, Inc. (NASDAQ:ETNB), around 2.91% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, designating 2.22 percent of its 13F equity portfolio to ETNB.

Now, key money managers were breaking ground themselves. Acuta Capital Partners, managed by Manfred Yu, assembled the largest position in 89bio, Inc. (NASDAQ:ETNB). Acuta Capital Partners had $10.7 million invested in the company at the end of the quarter. Neil Shahrestani’s Ikarian Capital also made a $8.7 million investment in the stock during the quarter. The other funds with brand new ETNB positions are Albert Cha and Frank Kung’s Vivo Capital, Greg Martinez’s Parkman Healthcare Partners, and Matthew Halbower’s Pentwater Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as 89bio, Inc. (NASDAQ:ETNB) but similarly valued. These stocks are Nordic American Tankers Ltd (NYSE:NAT), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), Rite Aid Corporation (NYSE:RAD), Quotient Limited (NASDAQ:QTNT), Odonate Therapeutics, Inc. (NASDAQ:ODT), ViewRay, Inc. (NASDAQ:VRAY), and Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX). This group of stocks’ market valuations resemble ETNB’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NAT 10 20214 5
SCHN 13 9841 2
RAD 10 31761 -2
QTNT 26 213732 9
ODT 17 253128 1
VRAY 11 108993 -1
CRNX 15 209097 -3
Average 14.6 120967 1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $262 million in ETNB’s case. Quotient Limited (NASDAQ:QTNT) is the most popular stock in this table. On the other hand Nordic American Tankers Ltd (NYSE:NAT) is the least popular one with only 10 bullish hedge fund positions. 89bio, Inc. (NASDAQ:ETNB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ETNB is 71.3. 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 positive signal but 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 December 14th and beat the market again by 15.8 percentage points. Unfortunately ETNB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ETNB were disappointed as the stock returned 3.1% since the end of September (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 many of these stocks already outperformed the market so far this year.

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Disclosure: None. This article was originally published at Insider Monkey.