Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Krystal Biotech, Inc. (NASDAQ:KRYS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is KRYS a good stock to buy now? Krystal Biotech, Inc. (NASDAQ:KRYS) shareholders have witnessed a decrease in support from the world’s most elite money managers recently. Krystal Biotech, Inc. (NASDAQ:KRYS) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. There were 13 hedge funds in our database with KRYS positions at the end of the second quarter. Our calculations also showed that KRYS 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 stock holders, hedge funds are assumed to be slow, old investment vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, Our researchers look at the leaders of this group, around 850 funds. It is estimated that this group of investors administer bulk of the smart money’s total asset base, and by keeping track of their inimitable equity investments, Insider Monkey has unearthed a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually 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 let’s take a look at the latest hedge fund action surrounding Krystal Biotech, Inc. (NASDAQ:KRYS).
Do Hedge Funds Think KRYS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the second quarter of 2020. By comparison, 11 hedge funds held shares or bullish call options in KRYS a year ago. 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 Krystal Biotech, Inc. (NASDAQ:KRYS) was held by Redmile Group, which reported holding $64.7 million worth of stock at the end of September. It was followed by Frazier Healthcare Partners with a $38.5 million position. Other investors bullish on the company included Baker Bros. Advisors, Point72 Asset Management, and Farallon Capital. In terms of the portfolio weights assigned to each position Frazier Healthcare Partners allocated the biggest weight to Krystal Biotech, Inc. (NASDAQ:KRYS), around 3.46% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, earmarking 1.19 percent of its 13F equity portfolio to KRYS.
Because Krystal Biotech, Inc. (NASDAQ:KRYS) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies that decided to sell off their entire stakes last quarter. Intriguingly, Matthew L Pinz’s Pinz Capital said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, totaling about $0.8 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Krystal Biotech, Inc. (NASDAQ:KRYS) but similarly valued. These stocks are Lantheus Holdings Inc (NASDAQ:LNTH), Perdoceo Education Corporation (NASDAQ:PRDO), OneSpan Inc. (NASDAQ:OSPN), Veritex Holdings Inc (NASDAQ:VBTX), ProAssurance Corporation (NYSE:PRA), Vericel Corp (NASDAQ:VCEL), and Morphic Holding, Inc. (NASDAQ:MORF). All of these stocks’ market caps are similar to KRYS’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 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $197 million in KRYS’s case. Vericel Corp (NASDAQ:VCEL) is the most popular stock in this table. On the other hand Veritex Holdings Inc (NASDAQ:VBTX) is the least popular one with only 8 bullish hedge fund positions. Krystal Biotech, Inc. (NASDAQ:KRYS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for KRYS is 29.1. 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 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 KRYS as the stock returned 28.8% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.