While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding iTeos Therapeutics, Inc. (NASDAQ:ITOS).
Is ITOS a good stock to buy now? The best stock pickers were betting on the stock. The number of bullish hedge fund positions improved by 11 in recent months. iTeos Therapeutics, Inc. (NASDAQ:ITOS) was in 11 hedge funds’ portfolios at the end of September. Our calculations also showed that ITOS 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To most shareholders, hedge funds are seen as worthless, outdated financial vehicles of years past. While there are greater than 8000 funds trading today, Our experts choose to focus on the top tier of this club, about 850 funds. These investment experts handle bulk of the hedge fund industry’s total asset base, and by keeping track of their inimitable investments, Insider Monkey has unsheathed a number of investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy beat 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 .
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 review the recent hedge fund action encompassing iTeos Therapeutics, Inc. (NASDAQ:ITOS).
Do Hedge Funds Think ITOS Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ITOS over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, RA Capital Management held the most valuable stake in iTeos Therapeutics, Inc. (NASDAQ:ITOS), which was worth $109 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $22.2 million worth of shares. Avoro Capital Advisors (venBio Select Advisor), Partner Fund Management, and Cormorant Asset 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 RA Capital Management allocated the biggest weight to iTeos Therapeutics, Inc. (NASDAQ:ITOS), around 1.99% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, designating 0.98 percent of its 13F equity portfolio to ITOS.
Now, key hedge funds were breaking ground themselves. RA Capital Management, managed by Peter Kolchinsky, initiated the most valuable position in iTeos Therapeutics, Inc. (NASDAQ:ITOS). RA Capital Management had $109 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $22.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Behzad Aghazadeh’s Avoro Capital Advisors (venBio Select Advisor), Christopher James’s Partner Fund Management, and Bihua Chen’s Cormorant Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as iTeos Therapeutics, Inc. (NASDAQ:ITOS) but similarly valued. These stocks are Redwood Trust, Inc. (NYSE:RWT), Eagle Bancorp, Inc. (NASDAQ:EGBN), BGC Partners, Inc. (NASDAQ:BGCP), John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS), The RMR Group Inc. (NASDAQ:RMR), Ladder Capital Corp (NYSE:LADR), and Forestar Group Inc. (NYSE:FOR). All of these stocks’ market caps are similar to ITOS’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 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $192 million in ITOS’s case. BGC Partners, Inc. (NASDAQ:BGCP) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks iTeos Therapeutics, Inc. (NASDAQ:ITOS) is even less popular than FOR. Our overall hedge fund sentiment score for ITOS is 10. 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. Hedge funds clearly dropped the ball on ITOS as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on ITOS as the stock returned 18.1% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.