Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Tricida, Inc. (NASDAQ:TCDA) based on that data and determine whether they were really smart about the stock.
Tricida, Inc. (NASDAQ:TCDA) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds’ portfolios at the end of June. Our calculations also showed that TCDA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare TCDA to other stocks including Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), Regenxbio Inc (NASDAQ:RGNX), and MacroGenics Inc (NASDAQ:MGNX) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are many gauges market participants use to size up stocks. A pair of the most useful gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a solid amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind let’s take a look at the fresh hedge fund action surrounding Tricida, Inc. (NASDAQ:TCDA).
What does smart money think about Tricida, Inc. (NASDAQ:TCDA)?
At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in TCDA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, OrbiMed Advisors, managed by Samuel Isaly, holds the largest position in Tricida, Inc. (NASDAQ:TCDA). OrbiMed Advisors has a $264.2 million position in the stock, comprising 3.7% of its 13F portfolio. Sitting at the No. 2 spot is Redmile Group, led by Jeremy Green, holding a $58.2 million position; 1.1% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish comprise Bihua Chen’s Cormorant Asset Management, Panayotis Takis Sparaggis’s Alkeon Capital Management and Julian Baker and Felix Baker’s Baker Bros. Advisors. In terms of the portfolio weights assigned to each position OrbiMed Advisors allocated the biggest weight to Tricida, Inc. (NASDAQ:TCDA), around 3.72% of its 13F portfolio. Opaleye Management is also relatively very bullish on the stock, designating 1.32 percent of its 13F equity portfolio to TCDA.
Since Tricida, Inc. (NASDAQ:TCDA) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds who were dropping their entire stakes by the end of the second quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital said goodbye to the largest stake of the 750 funds followed by Insider Monkey, worth close to $4.5 million in stock. Christiana Goh Bardon’s fund, Burrage Capital Management, also dropped its stock, about $2.8 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Tricida, Inc. (NASDAQ:TCDA). These stocks are Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), Regenxbio Inc (NASDAQ:RGNX), MacroGenics Inc (NASDAQ:MGNX), Sonic Automotive Inc (NYSE:SAH), CSG Systems International, Inc. (NASDAQ:CSGS), TowneBank (NASDAQ:TOWN), and Essential Properties Realty Trust, Inc. (NYSE:EPRT). This group of stocks’ market valuations match TCDA’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $506 million in TCDA’s case. Axonics Modulation Technologies, Inc. (NASDAQ:AXNX) is the most popular stock in this table. On the other hand TowneBank (NASDAQ:TOWN) is the least popular one with only 9 bullish hedge fund positions. Tricida, Inc. (NASDAQ:TCDA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TCDA is 79.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately TCDA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on TCDA were disappointed as the stock returned -67% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.