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Is ATHA A Good Stock To Buy According To Hedge Funds?

Abigail Fisher
·6 min read

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Athira Pharma, Inc. (NASDAQ:ATHA).

Is ATHA a good stock to buy now? The best stock pickers were taking an optimistic view. The number of bullish hedge fund bets advanced by 21 lately. Athira Pharma, Inc. (NASDAQ:ATHA) was in 21 hedge funds' portfolios at the end of September. Our calculations also showed that ATHA 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.

Andreas Halvorsen
Andreas Halvorsen

Andreas Halvorsen of Viking Global

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 15 best blue chip stocks 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. Keeping this in mind let's take a look at the fresh hedge fund action regarding Athira Pharma, Inc. (NASDAQ:ATHA).

Do Hedge Funds Think ATHA Is A Good Stock To Buy Now?

At the end of September, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21 from the second quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in ATHA 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.

The largest stake in Athira Pharma, Inc. (NASDAQ:ATHA) was held by Perceptive Advisors, which reported holding $57.5 million worth of stock at the end of September. It was followed by Viking Global with a $39.1 million position. Other investors bullish on the company included Rock Springs Capital Management, Citadel Investment Group, and Baker Bros. Advisors. In terms of the portfolio weights assigned to each position Acuta Capital Partners allocated the biggest weight to Athira Pharma, Inc. (NASDAQ:ATHA), around 1.82% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, designating 1.49 percent of its 13F equity portfolio to ATHA.

Consequently, specific money managers were leading the bulls' herd. Perceptive Advisors, managed by Joseph Edelman, established the most outsized position in Athira Pharma, Inc. (NASDAQ:ATHA). Perceptive Advisors had $57.5 million invested in the company at the end of the quarter. Andreas Halvorsen's Viking Global also initiated a $39.1 million position during the quarter. The following funds were also among the new ATHA investors: Kris Jenner, Gordon Bussard, Graham McPhail's Rock Springs Capital Management, Ken Griffin's Citadel Investment Group, and Julian Baker and Felix Baker's Baker Bros. Advisors.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Athira Pharma, Inc. (NASDAQ:ATHA) but similarly valued. We will take a look at RPC, Inc. (NYSE:RES), Kraton Corporation (NYSE:KRA), Merchants Bancorp (NASDAQ:MBIN), Loral Space & Communications Inc (NASDAQ:LORL), Anterix Inc. (NASDAQ:ATEX), Tutor Perini Corp (NYSE:TPC), and Tenneco Inc (NYSE:TEN). This group of stocks' market values match ATHA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RES,14,18496,-2 KRA,19,44524,1 MBIN,8,15448,0 LORL,21,238623,2 ATEX,17,292271,0 TPC,13,24265,-3 TEN,18,82480,4 Average,15.7,102301,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.7 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $214 million in ATHA's case. Loral Space & Communications Inc (NASDAQ:LORL) is the most popular stock in this table. On the other hand Merchants Bancorp (NASDAQ:MBIN) is the least popular one with only 8 bullish hedge fund positions. Athira Pharma, Inc. (NASDAQ:ATHA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ATHA is 90. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on ATHA as the stock returned 63.2% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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