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Is Five Prime Therapeutics Inc (FPRX) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Five Prime Therapeutics Inc (NASDAQ:FPRX).

Five Prime Therapeutics Inc (NASDAQ:FPRX) has seen a decrease in activity from the world’s largest hedge funds recently. Our calculations also showed that FPRX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

At the moment there are many gauges stock market investors can use to value publicly traded companies. Some of the most under-the-radar gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a healthy amount (see the details here).

Kris Jenner - Rock Springs Capital

Kris Jenner of Rock Springs Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the recent hedge fund action encompassing Five Prime Therapeutics Inc (NASDAQ:FPRX).

How have hedgies been trading Five Prime Therapeutics Inc (NASDAQ:FPRX)?

Heading into the second quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FPRX over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Among these funds, Biotechnology Value Fund / BVF Inc held the most valuable stake in Five Prime Therapeutics Inc (NASDAQ:FPRX), which was worth $17.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $4.5 million worth of shares. Two Sigma Advisors, AQR Capital Management, and Rock Springs Capital Management 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Five Prime Therapeutics Inc (NASDAQ:FPRX), around 1.65% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to FPRX.

Seeing as Five Prime Therapeutics Inc (NASDAQ:FPRX) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of funds who sold off their full holdings in the first quarter. It’s worth mentioning that Minhua Zhang’s Weld Capital Management said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, worth an estimated $0.1 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 3 funds in the first quarter.

Let’s check out hedge fund activity in other stocks similar to Five Prime Therapeutics Inc (NASDAQ:FPRX). These stocks are Escalade, Inc. (NASDAQ:ESCA), Platinum Group Metals Limited (NYSE:PLG), Hill International Inc (NYSE:HIL), and Manitex International, Inc. (NASDAQ:MNTX). All of these stocks’ market caps resemble FPRX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESCA 3 5879 0
PLG 3 3650 0
HIL 10 26366 -3
MNTX 7 7980 1
Average 5.75 10969 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $29 million in FPRX’s case. Hill International Inc (NYSE:HIL) is the most popular stock in this table. On the other hand Escalade, Inc. (NASDAQ:ESCA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Five Prime Therapeutics Inc (NASDAQ:FPRX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.3% in 2020 through June 25th but still managed to beat the market by 16.8 percentage points. Hedge funds were also right about betting on FPRX as the stock returned 189% so far in Q2 (through June 25th) 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.

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