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Sutro Biopharma, Inc. (STRO): Hedge Funds Are Snapping Up

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Sutro Biopharma, Inc. (NASDAQ:STRO).

Sutro Biopharma, Inc. (NASDAQ:STRO) was in 10 hedge funds’ portfolios at the end of the second quarter of 2019. STRO shareholders have witnessed an increase in hedge fund sentiment lately. There were 9 hedge funds in our database with STRO holdings at the end of the previous quarter. Our calculations also showed that STRO isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are many indicators investors can use to value their holdings. A couple of the best indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the top investment managers can trounce their index-focused peers by a very impressive margin (see the details here).

Michael Castor of Sio Capital

n addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s check out the fresh hedge fund action regarding Sutro Biopharma, Inc. (NASDAQ:STRO).

What does smart money think about Sutro Biopharma, Inc. (NASDAQ:STRO)?

At Q2’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in STRO over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

STRO_nov2019

According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the most valuable position in Sutro Biopharma, Inc. (NASDAQ:STRO), worth close to $19.7 million, comprising less than 0.1%% of its total 13F portfolio. On Citadel Investment Group’s heels is Samsara BioCapital, managed by Srini Akkaraju and Michael Dybbs, which holds a $12.8 million position; 8.5% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Stephen DuBois’s Camber Capital Management, Michael Castor’s Sio Capital and Steve Cohen’s Point72 Asset Management.

As industrywide interest jumped, specific money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Sutro Biopharma, Inc. (NASDAQ:STRO). Point72 Asset Management had $3.7 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a $0 million position during the quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Sutro Biopharma, Inc. (NASDAQ:STRO) but similarly valued. We will take a look at Ideanomics, Inc. (NASDAQ:IDEX), First Choice Bancorp (NASDAQ:FCBP), Reliant Bancorp, Inc. (NASDAQ:RBNC), and CapStar Financial Holdings, Inc. (NASDAQ:CSTR). All of these stocks’ market caps resemble STRO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IDEX 4 236 3
FCBP 1 268 1
RBNC 1 346 -1
CSTR 4 18034 -2
Average 2.5 4721 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $52 million in STRO’s case. Ideanomics, Inc. (NASDAQ:IDEX) is the most popular stock in this table. On the other hand First Choice Bancorp (NASDAQ:FCBP) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Sutro Biopharma, Inc. (NASDAQ:STRO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately STRO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on STRO were disappointed as the stock returned -20.1% during the third quarter 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 in Q3.

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

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