While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and deteriorating expectations towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the third quarter and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Audentes Therapeutics, Inc. (NASDAQ:BOLD) and see how the stock performed in comparison to hedge funds' consensus picks.
Audentes Therapeutics, Inc. (NASDAQ:BOLD) was in 25 hedge funds' portfolios at the end of the third quarter of 2019. BOLD investors should pay attention to a decrease in activity from the world's largest hedge funds of late. There were 27 hedge funds in our database with BOLD holdings at the end of the previous quarter. Our calculations also showed that BOLD isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
According to most investors, hedge funds are viewed as worthless, old investment tools of years past. While there are over 8000 funds with their doors open at present, We hone in on the elite of this group, around 750 funds. It is estimated that this group of investors have their hands on the majority of the hedge fund industry's total capital, and by following their best investments, Insider Monkey has unearthed many investment strategies that have historically beaten Mr. Market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_341400" align="aligncenter" width="600"] Samuel Isaly of OrbiMed Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. Now we're going to review the recent hedge fund action encompassing Audentes Therapeutics, Inc. (NASDAQ:BOLD).
What have hedge funds been doing with Audentes Therapeutics, Inc. (NASDAQ:BOLD)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the second quarter of 2019. By comparison, 17 hedge funds held shares or bullish call options in BOLD a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Redmile Group was the largest shareholder of Audentes Therapeutics, Inc. (NASDAQ:BOLD), with a stake worth $83.2 million reported as of the end of September. Trailing Redmile Group was Great Point Partners, which amassed a stake valued at $69.8 million. Partner Fund Management, OrbiMed Advisors, and Baker Bros. Advisors 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 Great Point Partners allocated the biggest weight to Audentes Therapeutics, Inc. (NASDAQ:BOLD), around 6.41% of its 13F portfolio. Foresite Capital is also relatively very bullish on the stock, setting aside 3.38 percent of its 13F equity portfolio to BOLD.
Because Audentes Therapeutics, Inc. (NASDAQ:BOLD) has experienced declining sentiment from hedge fund managers, logic holds that there exists a select few hedge funds that slashed their full holdings in the third quarter. Intriguingly, Ori Hershkovitz's Nexthera Capital cut the largest investment of the 750 funds monitored by Insider Monkey, worth close to $11.1 million in stock, and Phill Gross and Robert Atchinson's Adage Capital Management was right behind this move, as the fund sold off about $8.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Audentes Therapeutics, Inc. (NASDAQ:BOLD) but similarly valued. We will take a look at Sykes Enterprises, Incorporated (NASDAQ:SYKE), Boise Cascade Co (NYSE:BCC), Shutterstock Inc (NYSE:SSTK), and Perficient, Inc. (NASDAQ:PRFT). This group of stocks' market values resemble BOLD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYKE,13,71749,-2 BCC,13,52582,2 SSTK,15,79364,-3 PRFT,15,63971,-1 Average,14,66917,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $67 million. That figure was $486 million in BOLD's case. Shutterstock Inc (NYSE:SSTK) is the most popular stock in this table. On the other hand Sykes Enterprises, Incorporated (NASDAQ:SYKE) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Audentes Therapeutics, Inc. (NASDAQ:BOLD) is more popular among hedge funds. 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 10.1 percentage points. Hedge funds were also right about betting on BOLD as the stock returned 180.7% in 2019 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.