After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Seres Therapeutics Inc (NASDAQ:MCRB).
Is MCRB a good stock to buy now? Seres Therapeutics Inc (NASDAQ:MCRB) investors should be aware of an increase in support from the world’s most elite money managers lately. Seres Therapeutics Inc (NASDAQ:MCRB) was in 12 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. There were 5 hedge funds in our database with MCRB holdings at the end of June. Our calculations also showed that MCRB 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 a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. Now let’s go over the new hedge fund action encompassing Seres Therapeutics Inc (NASDAQ:MCRB).
Do Hedge Funds Think MCRB Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 140% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in MCRB 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.
More specifically, RA Capital Management was the largest shareholder of Seres Therapeutics Inc (NASDAQ:MCRB), with a stake worth $134.5 million reported as of the end of September. Trailing RA Capital Management was Ikarian Capital, which amassed a stake valued at $21.6 million. D E Shaw, Renaissance Technologies, and Opaleye 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 Seres Therapeutics Inc (NASDAQ:MCRB), around 2.46% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, designating 1.86 percent of its 13F equity portfolio to MCRB.
As one would reasonably expect, some big names were breaking ground themselves. RA Capital Management, managed by Peter Kolchinsky, established the largest position in Seres Therapeutics Inc (NASDAQ:MCRB). RA Capital Management had $134.5 million invested in the company at the end of the quarter. James A. Silverman’s Opaleye Management also made a $9.5 million investment in the stock during the quarter. The other funds with brand new MCRB positions are Steve Cohen’s Point72 Asset Management, Neil Shahrestani’s Ikarian Capital, and Cliff Asness’s AQR Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Seres Therapeutics Inc (NASDAQ:MCRB) but similarly valued. These stocks are StepStone Group Inc. (NASDAQ:STEP), Ping Identity Holding Corp. (NYSE:PING), Vaxcyte, Inc. (NASDAQ:PCVX), Vonage Holdings Corp. (NASDAQ:VG), Home Bancshares, Inc. (Conway, AR) (NASDAQ:HOMB), Brighthouse Financial, Inc. (NASDAQ:BHF), and Acushnet Holdings Corp. (NYSE:GOLF). This group of stocks’ market caps resemble MCRB’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 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $190 million in MCRB’s case. Vonage Holdings Corp. (NASDAQ:VG) is the most popular stock in this table. On the other hand Vaxcyte, Inc. (NASDAQ:PCVX) is the least popular one with only 10 bullish hedge fund positions. Seres Therapeutics Inc (NASDAQ:MCRB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for MCRB is 35. 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 negative signal and 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 surpassed the market again by 16.2 percentage points. Unfortunately MCRB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MCRB investors were disappointed as the stock returned -10.4% 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.