Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
OncoMed Pharmaceuticals Inc (NASDAQ:OMED) investors should pay attention to an increase in hedge fund interest of late. There were 8 hedge funds in our database with OMED holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Organovo Holdings Inc (NYSEMKT:ONVO), Karyopharm Therapeutics Inc (NASDAQ:KPTI), and Bank Mutual Corporation (NASDAQ:BKMU) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, we’re going to view the fresh action surrounding OncoMed Pharmaceuticals Inc (NASDAQ:OMED).
How have hedgies been trading OncoMed Pharmaceuticals Inc (NASDAQ:OMED)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 75% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OMED over the last 5 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Biotechnology Value Fund / BVF Inc, led by Mark Lampert, holds the largest position in OncoMed Pharmaceuticals Inc (NASDAQ:OMED). According to regulatory filings, the fund has a $20.7 million position in the stock, comprising 3.9% of its 13F portfolio. The second largest stake is held by Anand Parekh of Alyeska Investment Group, with a $10 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Stuart Weisbrod’s Iguana Healthcare Management, Israel Englander’s Millennium Management and Oleg Nodelman’s EcoR1 Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.