Is STRO Stock A Buy or Sell?

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. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Sutro Biopharma, Inc. (NASDAQ:STRO).

Is STRO stock a buy? Sutro Biopharma, Inc. (NASDAQ:STRO) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. STRO investors should pay attention to an increase in hedge fund sentiment of late. There were 23 hedge funds in our database with STRO positions at the end of the third quarter. Our calculations also showed that STRO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the 21st century investor’s toolkit there are several formulas investors have at their disposal to appraise their holdings. Some of the best formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outperform their index-focused peers by a healthy margin (see the details here).

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. With all of this in mind let’s take a peek at the latest hedge fund action regarding Sutro Biopharma, Inc. (NASDAQ:STRO).

Do Hedge Funds Think STRO Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 48% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards STRO over the last 22 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Peter Kolchinsky’s RA Capital Management has the largest position in Sutro Biopharma, Inc. (NASDAQ:STRO), worth close to $46 million, comprising 0.6% of its total 13F portfolio. The second largest stake is held by Biotechnology Value Fund / BVF Inc, led by Mark Lampert, holding a $40.3 million position; 1.6% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish consist of Srini Akkaraju and Michael Dybbs’s Samsara BioCapital, Steve Cohen’s Point72 Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Samsara BioCapital allocated the biggest weight to Sutro Biopharma, Inc. (NASDAQ:STRO), around 3.66% of its 13F portfolio. SilverArc Capital is also relatively very bullish on the stock, setting aside 2.33 percent of its 13F equity portfolio to STRO.

As one would reasonably expect, key money managers were leading the bulls’ herd. Holocene Advisors, managed by Brandon Haley, created the most valuable position in Sutro Biopharma, Inc. (NASDAQ:STRO). Holocene Advisors had $23.2 million invested in the company at the end of the quarter. Alan Frazier’s Frazier Healthcare Partners also initiated a $21.7 million position during the quarter. The other funds with brand new STRO positions are OrbiMed Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund.

Let’s check out hedge fund activity in other stocks similar to Sutro Biopharma, Inc. (NASDAQ:STRO). We will take a look at Inogen Inc (NASDAQ:INGN), Century Aluminum Co (NASDAQ:CENX), Patterson-UTI Energy, Inc. (NASDAQ:PTEN), Benchmark Electronics, Inc. (NYSE:BHE), Redwood Trust, Inc. (NYSE:RWT), Diversified Healthcare Trust (NASDAQ:DHC), and Douglas Dynamics Inc (NYSE:PLOW). This group of stocks’ market valuations match STRO’s market valuation.

View table here if you experience formatting issues.

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 $62 million. That figure was $352 million in STRO’s case. Redwood Trust, Inc. (NYSE:RWT) is the most popular stock in this table. On the other hand Douglas Dynamics Inc (NYSE:PLOW) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Sutro Biopharma, Inc. (NASDAQ:STRO) is more popular among hedge funds. Our overall hedge fund sentiment score for STRO is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7.9% in 2021 through April 1st but still managed to beat the market by 0.4 percentage points. Hedge funds were also right about betting on STRO as the stock returned 8.1% since the end of December (through 4/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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