Is Fate Therapeutics Stock A Buy or Sell?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Fate Therapeutics Inc (NASDAQ:FATE).

Is FATE stock a buy? Fate Therapeutics Inc (NASDAQ:FATE) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 34 hedge funds’ portfolios at the end of December. Our calculations also showed that FATE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare FATE to other stocks including Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), and Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR) to get a better sense of its popularity.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

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

At fourth quarter’s end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FATE over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Fate Therapeutics Inc (NASDAQ:FATE) was held by Redmile Group, which reported holding $1148.4 million worth of stock at the end of December. It was followed by Casdin Capital with a $277.3 million position. Other investors bullish on the company included Farallon Capital, ARK Investment Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Darwin Global Management allocated the biggest weight to Fate Therapeutics Inc (NASDAQ:FATE), around 24.18% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, designating 13.91 percent of its 13F equity portfolio to FATE.

Because Fate Therapeutics Inc (NASDAQ:FATE) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of fund managers that elected to cut their entire stakes in the fourth quarter. Intriguingly, Steve Cohen’s Point72 Asset Management sold off the largest stake of the 750 funds tracked by Insider Monkey, valued at about $6.1 million in stock. Bhagwan Jay Rao’s fund, Integral Health Asset Management, also dumped its stock, about $3.4 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Fate Therapeutics Inc (NASDAQ:FATE) but similarly valued. We will take a look at Mobile TeleSystems Public Joint Stock Company (NYSE:MBT), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), II-VI, Inc. (NASDAQ:IIVI), Reinsurance Group of America Inc (NYSE:RGA), Proofpoint Inc (NASDAQ:PFPT), and CAE, Inc. (NYSE:CAE). This group of stocks’ market caps resemble FATE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MBT 13 318688 3
IONS 28 524224 3
ARWR 24 252341 2
IIVI 26 115253 2
RGA 19 217640 -12
PFPT 26 487173 -11
CAE 10 86509 -2
Average 20.9 285975 -2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $2518 million in FATE’s case. Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) is the most popular stock in this table. On the other hand CAE, Inc. (NYSE:CAE) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Fate Therapeutics Inc (NASDAQ:FATE) is more popular among hedge funds. Our overall hedge fund sentiment score for FATE is 83.3. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Unfortunately FATE wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FATE were disappointed as the stock returned -9.9% since the end of the fourth quarter (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.