Were Hedge Funds Right About Beam Therapeutics Inc. (BEAM)?

At Insider Monkey, we pore over the filings of nearly 866 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31st. In this article, we will use that wealth of knowledge to determine whether or not Beam Therapeutics Inc. (NASDAQ:BEAM) makes for a good investment right now.

Beam Therapeutics Inc. (NASDAQ:BEAM) investors should pay attention to an increase in hedge fund interest lately. Beam Therapeutics Inc. (NASDAQ:BEAM) was in 18 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 14. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BEAM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of methods investors can use to size up publicly traded companies. Two of the most under-the-radar methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the market by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Lei Zhang Hillhouse Capital

Lei Zhang of Hillhouse Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 let’s take a glance at the new hedge fund action surrounding Beam Therapeutics Inc. (NASDAQ:BEAM).

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

At the end of March, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the fourth quarter of 2020. On the other hand, there were a total of 11 hedge funds with a bullish position in BEAM a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Is BEAM A Good Stock To Buy?

Among these funds, ARK Investment Management held the most valuable stake in Beam Therapeutics Inc. (NASDAQ:BEAM), which was worth $382.5 million at the end of the fourth quarter. On the second spot was Redmile Group which amassed $202.7 million worth of shares. Hillhouse Capital Management, Casdin Capital, and Farallon 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 Redmile Group allocated the biggest weight to Beam Therapeutics Inc. (NASDAQ:BEAM), around 2.86% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, earmarking 1.95 percent of its 13F equity portfolio to BEAM.

As industrywide interest jumped, some big names have jumped into Beam Therapeutics Inc. (NASDAQ:BEAM) headfirst. Farallon Capital, established the largest position in Beam Therapeutics Inc. (NASDAQ:BEAM). Farallon Capital had $47.4 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also made a $37.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Jim Simons’s Euclidean Capital, and Alan Howard’s Brevan Howard.

Let’s go over hedge fund activity in other stocks similar to Beam Therapeutics Inc. (NASDAQ:BEAM). These stocks are Webster Financial Corporation (NYSE:WBS), United Bankshares, Inc. (NASDAQ:UBSI), Allogene Therapeutics, Inc. (NASDAQ:ALLO), Emergent Biosolutions Inc (NYSE:EBS), RBC Bearings Incorporated (NASDAQ:ROLL), NCR Corporation (NYSE:NCR), and Cirrus Logic, Inc. (NASDAQ:CRUS). This group of stocks’ market valuations are similar to BEAM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WBS 27 431270 1
UBSI 9 44083 0
ALLO 19 282736 1
EBS 13 123191 -6
ROLL 10 47939 -4
NCR 24 383040 -8
CRUS 26 286037 -2
Average 18.3 228328 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $956 million in BEAM’s case. Webster Financial Corporation (NYSE:WBS) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Beam Therapeutics Inc. (NASDAQ:BEAM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BEAM is 64. 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 28.5% in 2021 through July 23rd and beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on BEAM, though not to the same extent, as the stock returned 15.4% since the end of Q1 (through July 23rd) and outperformed the market.

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