We recently published a list of Joe DiMenna’s Stock Portfolio: Top 10 Stocks to Buy. In this article, we are going to take a look at where Natera, Inc. (NASDAQ:NTRA) stands against other top stocks to buy of Joe DiMenna’s portfolio.

Zweig-DiMenna Associates Inc. is a U.S.-based hedge fund with a legacy spanning four decades. Established in 1984 by Joseph A. DiMenna and Martin Zweig, the firm specializes in absolute return investing. Its strategies encompass fundamental long/short equities and global macro approaches, positioning it among the longest-running hedge funds in the industry. DiMenna serves as the Managing Director and Chief Investment Officer, overseeing the firm’s partnerships and investment funds.

DiMenna’s initiation into the financial world began as a college student in 1977 when he became a research assistant for renowned investor Martin Zweig. A keen student of stock markets since his early teens, DiMenna had been an avid reader of financial newsletters, particularly Zweig’s highly regarded The Zweig Forecast. He earned a B.S. in Finance from Fairfield University’s Dolan School of Business in 1980. Beyond his work in finance, he has contributed to various organizations, serving on the boards of the Harlem Children’s Zone, Orchestra of St. Luke’s, The Brearley School, The Gilder Lehrman Institute of American History, and the New York Historical Society.

Zweig, a Ph.D. in finance, was known for his data-driven market analysis and the development of key investor sentiment indicators, including the Put/Call ratio. His well-known investment maxims, such as “Don’t fight the Fed” and “Don’t fight the tape,” significantly influenced DiMenna’s approach. Their professional relationship began when DiMenna, impressed by Zweig’s insights, reached out to him with market ideas and a request for a college recommendation. This correspondence led to his recruitment as a research assistant, a role that involved extensive data analysis, often delving into market trends spanning over 50 years. Zweig remained a key figure in DiMenna’s career until his passing in 2013.

After graduating in 1980, DiMenna continued working with Zweig, refining market research techniques and stock selection strategies. He took on editorial responsibilities for a stock-focused newsletter and co-developed a mutual fund trading business based on market timing principles. By 1983, DiMenna proposed leveraging their expertise to launch a hedge fund, a relatively rare venture at the time, with fewer than ten such funds in existence. In 1984, they established the first Zweig-DiMenna partnership, followed by the launch of Zweig-DiMenna International Limited in 1987. Their approach combined long/short equity investing with macroeconomic risk management. DiMenna led the stock selection and investment process, while Zweig focused on broader market conditions, shaping strategies that DiMenna implemented.

The fund quickly gained prominence for its strong returns. In 1999, BusinessWeek recognized DiMenna as “one of the best stock-pickers no one has ever heard of,” highlighting the fund’s impressive 15-year annualized return of 25% after fees, significantly outperforming the broader market’s 18.6% annualized total return.

DiMenna’s achievements earned him several accolades. In 2002, the National Foundation for Teaching Entrepreneurship named him “Entrepreneur of the Year” for his contributions to financial education. The Zweig-DiMenna International hedge fund won Absolute Return Magazine’s “U.S. Equity Fund of the Year” award in 2007 after delivering an 82.25% annual return, far surpassing industry peers. In 2008, Alpha Magazine ranked DiMenna 13th on its list of top moneymakers, citing his $450 million earnings in 2007 and his fund’s consistent double-digit annual returns between 2002 and 2007.

Our Methodology

The stocks discussed below were picked from Zweig-DiMenna Associates’ Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Natera, Inc. (NASDAQ:NTRA)

Number of Hedge Fund Holders as of Q4: 77

Zweig-DiMenna Associates’ Equity Stake: $36.31 Million 

Natera, Inc. (NASDAQ:NTRA), based in Austin, Texas, is a leading clinical genetic testing company specializing in non-invasive, cell-free DNA testing for women’s health, oncology, and organ health. As of Q4 2024, Zweig-DiMenna Associates held 229,365 shares of the company, valued at approximately $36.31 million, making it the firm’s seventh-largest holding. The stock has seen growing interest from institutional investors, with 77 hedge funds tracked by Insider Monkey holding stakes worth over $4.29 billion by the end of the fourth quarter, a notable increase from 62 funds in Q3. This rise in hedge fund participation suggests increasing confidence in Natera’s long-term potential and growth prospects.

Natera, Inc. (NASDAQ:NTRA) recently announced that it will release its Q4 and full-year 2024 financial results on February 27, 2025, followed by a conference call and webcast. The company’s latest earnings report for the quarter ended September 2024 exceeded expectations, with revenue reaching $440 million, 22% higher than analyst forecasts, while reported losses of $0.26 per share were lower than anticipated. Looking ahead, analysts predict the company will generate $1.79 billion in revenue for 2025, reflecting a 17% year-over-year increase, while losses are expected to decline by 20% to $1.30 per share. However, despite the optimistic revenue outlook, analysts slightly raised loss projections, indicating a mixed consensus on the company’s near-term profitability. Following these results, the consensus price target for Natera, Inc. (NASDAQ:NTRA) increased by 18% to $158 per share, with the most bullish analyst valuing the stock at $185 and the most bearish at $37, highlighting the uncertainty surrounding its future performance.

Despite the variation in price targets, the company remains an attractive investment due to its strong revenue growth, leadership in genetic testing, and expanding market presence. The company’s ability to outperform expectations while steadily reducing losses suggests it is on a solid trajectory toward profitability. With continued advancements in genetic testing and growing demand for precision medicine, Natera, Inc. (NASDAQ:NTRA) is well-positioned to capitalize on long-term industry trends, making it a compelling stock for investors seeking exposure to the healthcare innovation sector.

Overall, NTRA ranks 7th on our list of top stocks to buy of Joe DiMenna’s portfolio. While we acknowledge the potential for NTRA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NTRA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

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