The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. In this article we are going to take a look at smart money sentiment towards Pliant Therapeutics, Inc. (NASDAQ:PLRX).
Is PLRX a good stock to buy now? The best stock pickers were becoming less hopeful. The number of bullish hedge fund positions were trimmed by 2 in recent months. Pliant Therapeutics, Inc. (NASDAQ:PLRX) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that PLRX 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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 view the fresh hedge fund action surrounding Pliant Therapeutics, Inc. (NASDAQ:PLRX).
Do Hedge Funds Think PLRX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in PLRX a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Pliant Therapeutics, Inc. (NASDAQ:PLRX) was held by Redmile Group, which reported holding $76.8 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $27.8 million position. Other investors bullish on the company included Farallon Capital, Cormorant Asset Management, and Harvard Management Co. In terms of the portfolio weights assigned to each position Redmile Group allocated the biggest weight to Pliant Therapeutics, Inc. (NASDAQ:PLRX), around 1.41% of its 13F portfolio. Harvard Management Co is also relatively very bullish on the stock, setting aside 0.7 percent of its 13F equity portfolio to PLRX.
Judging by the fact that Pliant Therapeutics, Inc. (NASDAQ:PLRX) has experienced declining sentiment from hedge fund managers, logic holds that there is a sect of hedgies that slashed their entire stakes by the end of the third quarter. Intriguingly, Aaron Cowen’s Suvretta Capital Management cut the biggest stake of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $3.1 million in stock. Stuart J. Zimmer’s fund, Zimmer Partners, also cut its stock, about $2.8 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Pliant Therapeutics, Inc. (NASDAQ:PLRX). These stocks are National Bank Holdings Corp (NYSE:NBHC), Taysha Gene Therapies, Inc. (NASDAQ:TSHA), ATN International, Inc. (NASDAQ:ATNI), Twin River Worldwide Holdings Inc. (NYSE:TRWH), Huami Corporation (NYSE:HMI), Sohu.com Limited (NASDAQ:SOHU), and RadNet Inc. (NASDAQ:RDNT). All of these stocks’ market caps are closest to PLRX’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 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $158 million in PLRX’s case. Twin River Worldwide Holdings Inc. (NYSE:TRWH) is the most popular stock in this table. On the other hand National Bank Holdings Corp (NYSE:NBHC) is the least popular one with only 6 bullish hedge fund positions. Pliant Therapeutics, Inc. (NASDAQ:PLRX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PLRX is 51.1. 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 PLRX as the stock returned 22.1% 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.