Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Nantkwest Inc (NASDAQ:NK).
Is NK a good stock to buy now? Money managers were becoming more confident. The number of bullish hedge fund positions improved by 2 in recent months. Nantkwest Inc (NASDAQ:NK) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that NK 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. Keeping this in mind we’re going to go over the key hedge fund action encompassing Nantkwest Inc (NASDAQ:NK).
Do Hedge Funds Think NK Is A Good Stock To Buy Now?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NK over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Two Sigma Advisors was the largest shareholder of Nantkwest Inc (NASDAQ:NK), with a stake worth $3 million reported as of the end of September. Trailing Two Sigma Advisors was Citadel Investment Group, which amassed a stake valued at $2.1 million. Citadel Investment Group, AQR Capital Management, and Nantahala Capital 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 PDT Partners allocated the biggest weight to Nantkwest Inc (NASDAQ:NK), around 0.02% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to NK.
With a general bullishness amongst the heavyweights, key money managers have jumped into Nantkwest Inc (NASDAQ:NK) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most valuable position in Nantkwest Inc (NASDAQ:NK). Two Sigma Advisors had $3 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, D. E. Shaw’s D E Shaw, and Jonathan Soros’s JS Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Nantkwest Inc (NASDAQ:NK). We will take a look at Central Securities Corporation (NYSE:CET), Vapotherm, Inc. (NYSE:VAPO), Criteo SA (NASDAQ:CRTO), PAR Technology Corporation (NYSE:PAR), Guess’, Inc. (NYSE:GES), Antero Resources Corp (NYSE:AR), and Rosetta Stone Inc (NYSE:RST). This group of stocks’ market valuations match NK’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $7 million in NK’s case. Rosetta Stone Inc (NYSE:RST) is the most popular stock in this table. On the other hand Central Securities Corporation (NYSE:CET) is the least popular one with only 3 bullish hedge fund positions. Nantkwest Inc (NASDAQ:NK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for NK is 52.2. 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 NK as the stock returned 58.9% 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.