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In this article we will take a look at whether hedge funds think Achilles Therapeutics plc (NASDAQ:ACHL) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is ACHL a good stock to buy? Investors who are in the know were becoming hopeful. The number of bullish hedge fund positions improved by 16 in recent months. Achilles Therapeutics plc (NASDAQ:ACHL) was in 16 hedge funds' portfolios at the end of March. Our calculations also showed that ACHL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Today there are tons of methods stock market investors employ to assess their stock investments. A pair of the best methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outpace the broader indices 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 .
Peter Kolchinsky of RA 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 go over the fresh hedge fund action regarding Achilles Therapeutics plc (NASDAQ:ACHL).
Do Hedge Funds Think ACHL Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in ACHL a year ago. So, let's find out 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, Julian Baker and Felix Baker's Baker Bros. Advisors has the number one position in Achilles Therapeutics plc (NASDAQ:ACHL), worth close to $42.9 million, amounting to 0.2% of its total 13F portfolio. The second largest stake is held by Jeremy Green of Redmile Group, with a $34.6 million position; 0.5% of its 13F portfolio is allocated to the stock. Other peers that are bullish consist of OrbiMed Advisors, Peter Kolchinsky's RA Capital Management and Farallon Capital. In terms of the portfolio weights assigned to each position Redmile Group allocated the biggest weight to Achilles Therapeutics plc (NASDAQ:ACHL), around 0.49% of its 13F portfolio. Sphera Global Healthcare Fund is also relatively very bullish on the stock, dishing out 0.38 percent of its 13F equity portfolio to ACHL.
Now, specific money managers have been driving this bullishness. Baker Bros. Advisors, managed by Julian Baker and Felix Baker, assembled the most outsized position in Achilles Therapeutics plc (NASDAQ:ACHL). Baker Bros. Advisors had $42.9 million invested in the company at the end of the quarter. Jeremy Green's Redmile Group also made a $34.6 million investment in the stock during the quarter. The other funds with new positions in the stock are OrbiMed Advisors, Peter Kolchinsky's RA Capital Management, and Farallon Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Achilles Therapeutics plc (NASDAQ:ACHL) but similarly valued. We will take a look at Tristate Capital Holdings Inc (NASDAQ:TSC), ScanSource, Inc. (NASDAQ:SCSC), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), Hollysys Automation Technologies Ltd (NASDAQ:HOLI), Helix Energy Solutions Group Inc. (NYSE:HLX), SP Plus Corp (NASDAQ:SP), and Glatfelter Corp (NYSE:GLT). This group of stocks' market valuations are similar to ACHL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TSC,18,57402,2 SCSC,11,66261,1 ICPT,15,53876,-6 HOLI,18,91440,2 HLX,11,15044,0 SP,10,27117,-4 GLT,8,30694,1 Average,13,48833,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $185 million in ACHL's case. Tristate Capital Holdings Inc (NASDAQ:TSC) is the most popular stock in this table. On the other hand Glatfelter Corp (NYSE:GLT) is the least popular one with only 8 bullish hedge fund positions. Achilles Therapeutics plc (NASDAQ:ACHL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ACHL is 74. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately ACHL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ACHL were disappointed as the stock returned -61.2% since the end of March (through 7/23) 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.