Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Inozyme Pharma, Inc. (NASDAQ:INZY).
Is INZY a good stock to buy now? Investors who are in the know were taking an optimistic view. The number of bullish hedge fund positions rose by 13 recently. Inozyme Pharma, Inc. (NASDAQ:INZY) was in 13 hedge funds’ portfolios at the end of September. Our calculations also showed that INZY 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.
In the financial world there are many formulas market participants put to use to grade stocks. A couple of the most underrated formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top fund managers can beat their index-focused peers by a healthy amount (see the details here).
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 let’s check out the key hedge fund action encompassing Inozyme Pharma, Inc. (NASDAQ:INZY).
Do Hedge Funds Think INZY Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in INZY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RA Capital Management was the largest shareholder of Inozyme Pharma, Inc. (NASDAQ:INZY), with a stake worth $52.7 million reported as of the end of September. Trailing RA Capital Management was Deerfield Management, which amassed a stake valued at $30.2 million. Rock Springs Capital Management, Adage Capital Management, and OrbiMed 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 RA Capital Management allocated the biggest weight to Inozyme Pharma, Inc. (NASDAQ:INZY), around 0.96% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, designating 0.74 percent of its 13F equity portfolio to INZY.
Now, key hedge funds have been driving this bullishness. RA Capital Management, managed by Peter Kolchinsky, established the most outsized position in Inozyme Pharma, Inc. (NASDAQ:INZY). RA Capital Management had $52.7 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also made a $30.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s go over hedge fund activity in other stocks similar to Inozyme Pharma, Inc. (NASDAQ:INZY). We will take a look at Cellcom Israel Ltd. (NYSE:CEL), Knoll Inc (NYSE:KNL), P.H. Glatfelter Company (NYSE:GLT), Goldman Sachs BDC, Inc. (NYSE:GSBD), Autolus Therapeutics plc (NASDAQ:AUTL), First Bancorp (NASDAQ:FBNC), and BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). All of these stocks’ market caps are similar to INZY’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 9.6 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $155 million in INZY’s case. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is the most popular stock in this table. On the other hand Cellcom Israel Ltd. (NYSE:CEL) is the least popular one with only 2 bullish hedge fund positions. Inozyme Pharma, Inc. (NASDAQ:INZY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INZY is 54. 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 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately INZY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on INZY were disappointed as the stock returned -4% since the end of September (through 12/8) 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.
Disclosure: None. This article was originally published at Insider Monkey.