Is TCRR A Good Stock To Buy Now?

In this article you are going to find out whether hedge funds think TCR2 Therapeutics Inc. (NASDAQ:TCRR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is TCRR a good stock to buy now? TCR2 Therapeutics Inc. (NASDAQ:TCRR) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 8. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TCRR shareholders have witnessed an increase in hedge fund sentiment in recent months. There were 8 hedge funds in our database with TCRR positions at the end of the second quarter. Our calculations also showed that TCRR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

James Flynn Deerfield Management

James E. Flynn of Deerfield Management

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 review the key hedge fund action regarding TCR2 Therapeutics Inc. (NASDAQ:TCRR).

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

Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 63% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in TCRR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TCRR A Good Stock To Buy?

Among these funds, Redmile Group held the most valuable stake in TCR2 Therapeutics Inc. (NASDAQ:TCRR), which was worth $56.8 million at the end of the third quarter. On the second spot was Consonance Capital Management which amassed $30.7 million worth of shares. Deerfield Management, Partner Fund Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Consonance Capital Management allocated the biggest weight to TCR2 Therapeutics Inc. (NASDAQ:TCRR), around 3.74% of its 13F portfolio. Soleus Capital is also relatively very bullish on the stock, designating 3.04 percent of its 13F equity portfolio to TCRR.

As aggregate interest increased, key money managers have jumped into TCR2 Therapeutics Inc. (NASDAQ:TCRR) headfirst. Consonance Capital Management, managed by Mitchell Blutt, established the biggest position in TCR2 Therapeutics Inc. (NASDAQ:TCRR). Consonance Capital Management had $30.7 million invested in the company at the end of the quarter. James E. Flynn’s Deerfield Management also made a $24.4 million investment in the stock during the quarter. The following funds were also among the new TCRR investors: Christopher James’s Partner Fund Management, Bihua Chen’s Cormorant Asset Management, and Joseph Edelman’s Perceptive Advisors.

Let’s check out hedge fund activity in other stocks similar to TCR2 Therapeutics Inc. (NASDAQ:TCRR). These stocks are Brookfield Property REIT Inc. (NASDAQ:BPYU), Kelly Services, Inc. (NASDAQ:KELYA), Unisys Corporation (NYSE:UIS), MGP Ingredients Inc (NASDAQ:MGPI), The Shyft Group, Inc. (NASDAQ:SHYF), Kadmon Holdings, Inc. (NYSE:KDMN), and Solar Capital Ltd. (NASDAQ:SLRC). All of these stocks’ market caps resemble TCRR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BPYU 12 76324 0
KELYA 9 10589 -2
UIS 14 55912 -5
MGPI 11 19354 -2
SHYF 13 71919 -5
KDMN 24 304665 -5
SLRC 12 20556 0
Average 13.6 79903 -2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $80 million. That figure was $179 million in TCRR’s case. Kadmon Holdings, Inc. (NYSE:KDMN) is the most popular stock in this table. On the other hand Kelly Services, Inc. (NASDAQ:KELYA) is the least popular one with only 9 bullish hedge fund positions. TCR2 Therapeutics Inc. (NASDAQ:TCRR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TCRR is 53.3. 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 TCRR as the stock returned 59.1% 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.