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In this article we will analyze whether Bicycle Therapeutics plc (NASDAQ:BCYC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is BCYC a good stock to buy now? Investors who are in the know were in a bullish mood. The number of bullish hedge fund positions moved up by 1 lately. Bicycle Therapeutics plc (NASDAQ:BCYC) was in 7 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that BCYC 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). There were 6 hedge funds in our database with BCYC positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Today there are many methods shareholders use to appraise stocks. Two of the best methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the market by a very impressive margin (see the details here).
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. Now let's check out the fresh hedge fund action encompassing Bicycle Therapeutics plc (NASDAQ:BCYC).
Hedge fund activity in Bicycle Therapeutics plc (NASDAQ:BCYC)
At third quarter's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the second quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in BCYC a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Eashwar Krishnan's Tybourne Capital Management has the biggest position in Bicycle Therapeutics plc (NASDAQ:BCYC), worth close to $37.3 million, comprising 0.9% of its total 13F portfolio. Coming in second is Steve Cohen of Point72 Asset Management, with a $26 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Robert Pohly's Samlyn Capital, Renaissance Technologies and Benjamin A. Smith's Laurion Capital Management. In terms of the portfolio weights assigned to each position Tybourne Capital Management allocated the biggest weight to Bicycle Therapeutics plc (NASDAQ:BCYC), around 0.92% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, dishing out 0.14 percent of its 13F equity portfolio to BCYC.
As one would reasonably expect, specific money managers were leading the bulls' herd. Samlyn Capital, managed by Robert Pohly, assembled the most outsized position in Bicycle Therapeutics plc (NASDAQ:BCYC). Samlyn Capital had $8 million invested in the company at the end of the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Bicycle Therapeutics plc (NASDAQ:BCYC) but similarly valued. These stocks are dMY Technology Group, Inc. (NYSE:DMYT), Century Bancorp, Inc. (NASDAQ:CNBKA), Teekay Tankers Ltd. (NYSE:TNK), Par Pacific Holdings, Inc. (NYSE:PARR), IDEAYA Biosciences, Inc. (NASDAQ:IDYA), Nam Tai Property Inc (NYSE:NTP), and Ovid Therapeutics Inc. (NASDAQ:OVID). This group of stocks' market values are similar to BCYC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DMYT,26,82516,4 CNBKA,4,14693,1 TNK,13,20186,-4 PARR,15,63142,1 IDYA,12,69419,0 NTP,4,23101,-2 OVID,15,39390,4 Average,12.7,44635,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $74 million in BCYC's case. dMY Technology Group, Inc. (NYSE:DMYT) is the most popular stock in this table. On the other hand Century Bancorp, Inc. (NASDAQ:CNBKA) is the least popular one with only 4 bullish hedge fund positions. Bicycle Therapeutics plc (NASDAQ:BCYC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BCYC is 42.8. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 16 percentage points. Unfortunately BCYC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BCYC investors were disappointed as the stock returned 8.5% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.