Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Dyne Therapeutics, Inc. (NASDAQ:DYN).
Is Dyne Therapeutics, Inc. (NASDAQ:DYN) a cheap investment now? Prominent investors were betting on the stock. The number of bullish hedge fund bets went up by 2 lately. Dyne Therapeutics, Inc. (NASDAQ:DYN) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistic is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DYN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with DYN positions at the end of the first quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. With all of this in mind let’s take a look at the new hedge fund action regarding Dyne Therapeutics, Inc. (NASDAQ:DYN).
Do Hedge Funds Think DYN Is A Good Stock To Buy Now?
At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in DYN a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of Dyne Therapeutics, Inc. (NASDAQ:DYN), with a stake worth $61.4 million reported as of the end of June. Trailing Citadel Investment Group was RA Capital Management, which amassed a stake valued at $59 million. Logos Capital, Hillhouse Capital Management, and Deerfield Management 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 Logos Capital allocated the biggest weight to Dyne Therapeutics, Inc. (NASDAQ:DYN), around 3.66% of its 13F portfolio. Great Point Partners is also relatively very bullish on the stock, earmarking 2.97 percent of its 13F equity portfolio to DYN.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Great Point Partners, managed by Jeffrey Jay and David Kroin, created the most outsized position in Dyne Therapeutics, Inc. (NASDAQ:DYN). Great Point Partners had $14.2 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $4.1 million position during the quarter. The other funds with brand new DYN positions are Phill Gross and Robert Atchinson’s Adage Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks similar to Dyne Therapeutics, Inc. (NASDAQ:DYN). We will take a look at Ocular Therapeutix Inc (NASDAQ:OCUL), MarineMax, Inc. (NYSE:HZO), CEVA, Inc. (NASDAQ:CEVA), Silverback Therapeutics, Inc. (NASDAQ:SBTX), National HealthCare Corporation (NYSE:NHC), Meridian Bancorp, Inc. (NASDAQ:EBSB), and Anterix Inc. (NASDAQ:ATEX). This group of stocks’ market values are closest to DYN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $302 million in DYN’s case. Ocular Therapeutix Inc (NASDAQ:OCUL) is the most popular stock in this table. On the other hand National HealthCare Corporation (NYSE:NHC) is the least popular one with only 13 bullish hedge fund positions. Dyne Therapeutics, Inc. (NASDAQ:DYN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DYN is 87. 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 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately DYN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DYN were disappointed as the stock returned -31.9% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.