Is Translate Bio, Inc. (TBIO) Going to Burn These Hedge Funds?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Translate Bio, Inc. (NASDAQ:TBIO) in this article.

Translate Bio, Inc. (NASDAQ:TBIO) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 20 hedge funds’ portfolios at the end of March. Our calculations also showed that TBIO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TBIO to other stocks including Sculptor Capital Management, Inc. (NYSE:SCU), First Bancorp (NASDAQ:FBNC), and Getty Realty Corp. (NYSE:GTY) to get a better sense of its popularity.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the recent hedge fund action regarding Translate Bio, Inc. (NASDAQ:TBIO).

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

At the end of March, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. On the other hand, there were a total of 7 hedge funds with a bullish position in TBIO a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Among these funds, Baupost Group held the most valuable stake in Translate Bio, Inc. (NASDAQ:TBIO), which was worth $295.8 million at the end of the fourth quarter. On the second spot was Frazier Healthcare Partners which amassed $36 million worth of shares. Camber Capital Management, Rock Springs Capital Management, and EcoR1 Capital 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 Frazier Healthcare Partners allocated the biggest weight to Translate Bio, Inc. (NASDAQ:TBIO), around 2.89% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, earmarking 2.36 percent of its 13F equity portfolio to TBIO.

Because Translate Bio, Inc. (NASDAQ:TBIO) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest stake of all the hedgies monitored by Insider Monkey, worth close to $0.7 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dumped about $0.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Translate Bio, Inc. (NASDAQ:TBIO) but similarly valued. These stocks are Sculptor Capital Management, Inc. (NYSE:SCU), First Bancorp (NASDAQ:FBNC), Getty Realty Corp. (NYSE:GTY), Amerisafe, Inc. (NASDAQ:AMSF), Arko Corp. (NASDAQ:ARKO), Model N Inc (NYSE:MODN), and Tompkins Financial Corporation (NYSE:TMP). This group of stocks’ market values resemble TBIO’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $398 million in TBIO’s case. Arko Corp. (NASDAQ:ARKO) is the most popular stock in this table. On the other hand Tompkins Financial Corporation (NYSE:TMP) is the least popular one with only 5 bullish hedge fund positions. Translate Bio, Inc. (NASDAQ:TBIO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TBIO is 75. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on TBIO as the stock returned 78.9% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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