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Is Natera Inc (NTRA) Going to Burn These Hedge Funds?

How do we determine whether Natera Inc (NASDAQ:NTRA) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Is Natera Inc (NASDAQ:NTRA) a buy, sell, or hold? The best stock pickers are betting on the stock. The number of long hedge fund positions advanced by 7 recently. Our calculations also showed that NTRA isn’t among the 30 most popular stocks among hedge funds.

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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jane Mendillo

Let’s take a peek at the key hedge fund action encompassing Natera Inc (NASDAQ:NTRA).

Hedge fund activity in Natera Inc (NASDAQ:NTRA)

Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in NTRA heading into this year. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).


More specifically, Millennium Management was the largest shareholder of Natera Inc (NASDAQ:NTRA), with a stake worth $47.5 million reported as of the end of September. Trailing Millennium Management was Point72 Asset Management, which amassed a stake valued at $38.7 million. Renaissance Technologies, OrbiMed Advisors, and Harvard Management Co were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Natera Inc (NASDAQ:NTRA) headfirst. Point72 Asset Management, managed by Steve Cohen, created the biggest position in Natera Inc (NASDAQ:NTRA). Point72 Asset Management had $38.7 million invested in the company at the end of the quarter. Jane Mendillo’s Harvard Management Co also initiated a $15.3 million position during the quarter. The other funds with brand new NTRA positions are Steve Cohen’s Point72 Asset Management, Efrem Kamen’s Pura Vida Investments, and Brad Farber’s Atika Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Natera Inc (NASDAQ:NTRA) but similarly valued. These stocks are Tortoise Energy Infrastructure Corporation (NYSE:TYG), U.S. Silica Holdings Inc (NYSE:SLCA), Bright Scholar Education Holdings Limited (NYSE:BEDU), and Crocs, Inc. (NASDAQ:CROX). This group of stocks’ market valuations match NTRA’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TYG 3 17317 0
SLCA 16 302824 -1
BEDU 10 120386 -3
CROX 27 255232 9
Average 14 173940 1.25

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 $174 million. That figure was $204 million in NTRA’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Tortoise Energy Infrastructure Corporation (NYSE:TYG) is the least popular one with only 3 bullish hedge fund positions. Natera Inc (NASDAQ:NTRA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CROX might be a better candidate to consider a long position.

Disclosure: None. This article was originally published at Insider Monkey.

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