Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Kymera Therapeutics, Inc. (NASDAQ:KYMR) in this article.
Is KYMR a good stock to buy now? The smart money was becoming hopeful. The number of long hedge fund positions improved by 22 lately. Kymera Therapeutics, Inc. (NASDAQ:KYMR) was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that KYMR 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. Keeping this in mind let’s take a gander at the key hedge fund action encompassing Kymera Therapeutics, Inc. (NASDAQ:KYMR).
Do Hedge Funds Think KYMR Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards KYMR over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Redmile Group was the largest shareholder of Kymera Therapeutics, Inc. (NASDAQ:KYMR), with a stake worth $88.3 million reported as of the end of September. Trailing Redmile Group was Biotechnology Value Fund / BVF Inc, which amassed a stake valued at $85 million. Baker Bros. Advisors, Rock Springs Capital Management, and Logos Capital 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 Kymera Therapeutics, Inc. (NASDAQ:KYMR), around 4.63% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, earmarking 1.62 percent of its 13F equity portfolio to KYMR.
Now, key hedge funds were breaking ground themselves. Redmile Group, managed by Jeremy Green, created the biggest position in Kymera Therapeutics, Inc. (NASDAQ:KYMR). Redmile Group had $88.3 million invested in the company at the end of the quarter. Mark Lampert’s Biotechnology Value Fund / BVF Inc also made a $85 million investment in the stock during the quarter. The other funds with brand new KYMR positions are Julian Baker and Felix Baker’s Baker Bros. Advisors, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, and Arsani William’s Logos Capital.
Let’s go over hedge fund activity in other stocks similar to Kymera Therapeutics, Inc. (NASDAQ:KYMR). We will take a look at WesBanco, Inc. (NASDAQ:WSBC), Generation Bio Co. (NASDAQ:GBIO), McGrath RentCorp (NASDAQ:MGRC), Niu Technologies (NASDAQ:NIU), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), RLJ Lodging Trust (NYSE:RLJ), and Azure Power Global Limited (NYSE:AZRE). This group of stocks’ market values are closest to KYMR’s market value.
|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 13.1 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $314 million in KYMR’s case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand Azure Power Global Limited (NYSE:AZRE) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Kymera Therapeutics, Inc. (NASDAQ:KYMR) is more popular among hedge funds. Our overall hedge fund sentiment score for KYMR is 90. 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 returned 30.7% in 2020 through December 14th but still managed to beat the market by 15.8 percentage points. Hedge funds were also right about betting on KYMR as the stock returned 107.8% since the end of September (through 12/14) 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.