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Is Precision BioSciences, Inc. (DTIL) Going To Burn These Hedge Funds ?

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Precision BioSciences, Inc. (NASDAQ:DTIL).

Precision BioSciences, Inc. (NASDAQ:DTIL) has seen a decrease in hedge fund interest lately. DTIL was in 9 hedge funds’ portfolios at the end of June. There were 14 hedge funds in our database with DTIL positions at the end of the previous quarter. Our calculations also showed that DTIL isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

DTIL_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the fresh hedge fund action regarding Precision BioSciences, Inc. (NASDAQ:DTIL).

How have hedgies been trading Precision BioSciences, Inc. (NASDAQ:DTIL)?

Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -36% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DTIL over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Peter Kolchinsky

The largest stake in Precision BioSciences, Inc. (NASDAQ:DTIL) was held by RA Capital Management, which reported holding $24.4 million worth of stock at the end of March. It was followed by Adage Capital Management with a $11.9 million position. Other investors bullish on the company included DSAM Partners, Laurion Capital Management, and Cormorant Asset Management.

Since Precision BioSciences, Inc. (NASDAQ:DTIL) has experienced falling interest from the smart money, it’s safe to say that there was a specific group of funds who were dropping their positions entirely last quarter. Intriguingly, Israel Englander’s Millennium Management dumped the largest position of the “upper crust” of funds followed by Insider Monkey, valued at about $3.1 million in stock, and Arthur B Cohen and Joseph Healey’s Healthcor Management LP was right behind this move, as the fund said goodbye to about $2.7 million worth. These moves are important to note, as total hedge fund interest dropped by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Precision BioSciences, Inc. (NASDAQ:DTIL) but similarly valued. We will take a look at Peoples Bancorp Inc. (NASDAQ:PEBO), Globalstar, Inc. (NYSE:GSAT), Cellectis SA (NASDAQ:CLLS), and Model N Inc (NYSE:MODN). All of these stocks’ market caps resemble DTIL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PEBO 7 26726 -2
GSAT 13 112559 -2
CLLS 11 31400 3
MODN 12 112063 -4
Average 10.75 70687 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $64 million in DTIL’s case. Globalstar, Inc. (NYSE:GSAT) is the most popular stock in this table. On the other hand Peoples Bancorp Inc. (NASDAQ:PEBO) is the least popular one with only 7 bullish hedge fund positions. Precision BioSciences, Inc. (NASDAQ:DTIL) is not the least popular stock in this group but hedge fund interest is still below average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately DTIL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); DTIL investors were disappointed as the stock returned -36.7% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.

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

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