Is Frequency Therapeutics, Inc. (NASDAQ:FREQ) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Frequency Therapeutics, Inc. (NASDAQ:FREQ) ready to rally soon? Hedge funds were getting more bullish. The number of long hedge fund bets inched up by 1 recently. Frequency Therapeutics, Inc. (NASDAQ:FREQ) was in 7 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. Our calculations also showed that FREQ isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (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, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. With all of this in mind we’re going to analyze the new hedge fund action encompassing Frequency Therapeutics, Inc. (NASDAQ:FREQ).
How are hedge funds trading Frequency Therapeutics, Inc. (NASDAQ:FREQ)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FREQ over the last 21 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Perceptive Advisors was the largest shareholder of Frequency Therapeutics, Inc. (NASDAQ:FREQ), with a stake worth $62.6 million reported as of the end of September. Trailing Perceptive Advisors was Baker Bros. Advisors, which amassed a stake valued at $18.2 million. Laurion Capital Management, Burrage Capital Management, and Driehaus 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 Burrage Capital Management allocated the biggest weight to Frequency Therapeutics, Inc. (NASDAQ:FREQ), around 2.03% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, dishing out 0.91 percent of its 13F equity portfolio to FREQ.
As one would reasonably expect, some big names have jumped into Frequency Therapeutics, Inc. (NASDAQ:FREQ) headfirst. Driehaus Capital, managed by Richard Driehaus, assembled the most valuable position in Frequency Therapeutics, Inc. (NASDAQ:FREQ). Driehaus Capital had $1.7 million invested in the company at the end of the quarter. Matthew L Pinz’s Pinz Capital also made a $0.2 million investment in the stock during the quarter.
Let’s now review hedge fund activity in other stocks similar to Frequency Therapeutics, Inc. (NASDAQ:FREQ). These stocks are Crescent Point Energy Corp (NYSE:CPG), HighPeak Energy, Inc. (NASDAQ:HPK), Kearny Financial Corp. (NASDAQ:KRNY), Bristow Group, Inc. (NYSE:VTOL), Arch Resources, Inc. (NYSE:ARCH), Magic Software Enterprises Ltd. (NASDAQ:MGIC), and Winmark Corporation (NASDAQ:WINA). This group of stocks’ market values match FREQ’s market value.
|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 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $88 million in FREQ’s case. Arch Resources, Inc. (NYSE:ARCH) is the most popular stock in this table. On the other hand HighPeak Energy, Inc. (NASDAQ:HPK) is the least popular one with only 1 bullish hedge fund positions. Frequency Therapeutics, Inc. (NASDAQ:FREQ) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FREQ is 41.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on FREQ as the stock returned 42.1% since the end of the third quarter (through 12/2) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.