It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Five Prime Therapeutics Inc (NASDAQ:FPRX).
Is Five Prime Therapeutics Inc (NASDAQ:FPRX) a buy right now? Money managers are indeed getting less optimistic. The number of long hedge fund positions fell by 2 recently. FPRX was in 20 hedge funds’ portfolios at the end of the third quarter of 2016. There were 22 hedge funds in our database with FPRX positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Ramco-Gershenson Properties Trust (NYSE:RPT), Dean Foods Co (NYSE:DF), and Evolent Health Inc (NYSE:EVH) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How have hedgies been trading Five Prime Therapeutics Inc (NASDAQ:FPRX)?
Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a dip of 9% from the second quarter of 2016. By comparison, 23 hedge funds held shares or bullish call options in FPRX heading into this year, though sentiment is flat since the end of Q3 2015. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Adage Capital Management, led by Phill Gross and Robert Atchinson, holds the most valuable position in Five Prime Therapeutics Inc (NASDAQ:FPRX). Adage Capital Management has a $111.5 million position in the stock. On Adage Capital Management’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $21.8 million position. Other peers that are bullish consist of James E. Flynn’s Deerfield Management, Oleg Nodelman’s EcoR1 Capital, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.