Is CDTX A Good Stock To Buy Now?
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Cidara Therapeutics Inc (NASDAQ:CDTX).
Is CDTX a good stock to buy now? Cidara Therapeutics Inc (NASDAQ:CDTX) investors should be aware of an increase in enthusiasm from smart money in recent months. Cidara Therapeutics Inc (NASDAQ:CDTX) was in 8 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. Our calculations also showed that CDTX 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 today’s marketplace there are a lot of signals market participants have at their disposal to appraise stocks. A pair of the less known signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outclass the broader indices by a solid margin (see the details here).
Peter Rathjens of Arrowstreet Capital
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 we're going to take a look at the latest hedge fund action encompassing Cidara Therapeutics Inc (NASDAQ:CDTX).
Hedge fund activity in Cidara Therapeutics Inc (NASDAQ:CDTX)
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in CDTX a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of Cidara Therapeutics Inc (NASDAQ:CDTX), with a stake worth $10.7 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Frazier Healthcare Partners, which amassed a stake valued at $3.7 million. Renaissance Technologies, Opaleye Management, and Dorset Management 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 Dorset Management allocated the biggest weight to Cidara Therapeutics Inc (NASDAQ:CDTX), around 0.68% of its 13F portfolio. Biotechnology Value Fund / BVF Inc is also relatively very bullish on the stock, earmarking 0.58 percent of its 13F equity portfolio to CDTX.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. HighVista Strategies, managed by Andre F. Perold, created the most valuable position in Cidara Therapeutics Inc (NASDAQ:CDTX). HighVista Strategies had $0.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $0 million position during the quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Cidara Therapeutics Inc (NASDAQ:CDTX) but similarly valued. These stocks are Intellicheck Inc. (NASDAQ:IDN), Security National Financial Corp. (NASDAQ:SNFCA), First Business Financial Services Inc (NASDAQ:FBIZ), First Bank (NASDAQ:FRBA), The Eastern Company (NASDAQ:EML), 1st Constitution Bancorp (NASDAQ:FCCY), and Washington Prime Group Inc. (NYSE:WPG). All of these stocks' market caps are closest to CDTX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IDN,1,226,-3 SNFCA,2,1583,0 FBIZ,2,3630,-2 FRBA,6,3211,0 EML,5,33660,0 FCCY,2,1575,1 WPG,8,4485,-9 Average,3.7,6910,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.7 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $22 million in CDTX's case. Washington Prime Group Inc. (NYSE:WPG) is the most popular stock in this table. On the other hand Intellicheck Inc. (NASDAQ:IDN) is the least popular one with only 1 bullish hedge fund positions. Cidara Therapeutics Inc (NASDAQ:CDTX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CDTX is 74.1. 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 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 beat the market again by 16 percentage points. Unfortunately CDTX wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CDTX were disappointed as the stock returned -25.3% 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
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