The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Tricida, Inc. (NASDAQ:TCDA) based on those filings.
Tricida, Inc. (NASDAQ:TCDA) investors should be aware of a decrease in enthusiasm from smart money in recent months. Tricida, Inc. (NASDAQ:TCDA) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 24. There were 24 hedge funds in our database with TCDA holdings at the end of June. Our calculations also showed that TCDA 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. Keeping this in mind let’s take a peek at the recent hedge fund action surrounding Tricida, Inc. (NASDAQ:TCDA).
Do Hedge Funds Think TCDA Is A Good Stock To Buy Now?
At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TCDA over the last 21 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.
The largest stake in Tricida, Inc. (NASDAQ:TCDA) was held by OrbiMed Advisors, which reported holding $87.1 million worth of stock at the end of September. It was followed by Redmile Group with a $25.9 million position. Other investors bullish on the company included Point72 Asset Management, Cormorant Asset Management, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Burrage Capital Management allocated the biggest weight to Tricida, Inc. (NASDAQ:TCDA), around 1.35% of its 13F portfolio. OrbiMed Advisors is also relatively very bullish on the stock, dishing out 1.1 percent of its 13F equity portfolio to TCDA.
Seeing as Tricida, Inc. (NASDAQ:TCDA) has experienced a decline in interest from the smart money, we can see that there exists a select few fund managers that elected to cut their positions entirely last quarter. At the top of the heap, Panayotis Takis Sparaggis’s Alkeon Capital Management dumped the largest position of all the hedgies watched by Insider Monkey, worth an estimated $22.2 million in stock. Julian Baker and Felix Baker’s fund, Baker Bros. Advisors, also dropped its stock, about $21.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Tricida, Inc. (NASDAQ:TCDA) but similarly valued. These stocks are Blucora Inc (NASDAQ:BCOR), Camden National Corporation (NASDAQ:CAC), Donnelley Financial Solutions, Inc. (NYSE:DFIN), WideOpenWest, Inc. (NYSE:WOW), Juniper Industrial Holdings, Inc. (NYSE:JIH), Cowen Inc. (NASDAQ:COWN), and The First Bancshares, Inc. (MS) (NASDAQ:FBMS). This group of stocks’ market valuations are closest to TCDA’s market valuation.
|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 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $144 million in TCDA’s case. Juniper Industrial Holdings, Inc. (NYSE:JIH) is the most popular stock in this table. On the other hand The First Bancshares, Inc. (MS) (NASDAQ:FBMS) is the least popular one with only 7 bullish hedge fund positions. Tricida, Inc. (NASDAQ:TCDA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TCDA is 58.2. 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. This is a slightly positive signal but 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately TCDA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TCDA were disappointed as the stock returned -14.1% since the end of September (through 12/14) 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.