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After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Concert Pharmaceuticals Inc (NASDAQ:CNCE).
Is CNCE a good stock to buy now? Concert Pharmaceuticals Inc (NASDAQ:CNCE) has seen an increase in hedge fund interest in recent months. Concert Pharmaceuticals Inc (NASDAQ:CNCE) was in 16 hedge funds' portfolios at the end of September. The all time high for this statistic is 20. Our calculations also showed that CNCE 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
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. With all of this in mind let's take a look at the recent hedge fund action regarding Concert Pharmaceuticals Inc (NASDAQ:CNCE).
Do Hedge Funds Think CNCE Is A Good Stock To Buy Now?
At third quarter's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 23% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CNCE over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Perceptive Advisors held the most valuable stake in Concert Pharmaceuticals Inc (NASDAQ:CNCE), which was worth $21.1 million at the end of the third quarter. On the second spot was RA Capital Management which amassed $18.3 million worth of shares. Millennium Management, Point72 Asset Management, and Renaissance Technologies 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 Acuta Capital Partners allocated the biggest weight to Concert Pharmaceuticals Inc (NASDAQ:CNCE), around 0.8% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, earmarking 0.33 percent of its 13F equity portfolio to CNCE.
Consequently, key money managers have been driving this bullishness. Acuta Capital Partners, managed by Manfred Yu, initiated the largest position in Concert Pharmaceuticals Inc (NASDAQ:CNCE). Acuta Capital Partners had $2.9 million invested in the company at the end of the quarter. James A. Silverman's Opaleye Management also made a $1 million investment in the stock during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).
Let's now take a look at hedge fund activity in other stocks similar to Concert Pharmaceuticals Inc (NASDAQ:CNCE). We will take a look at Urovant Sciences Ltd. (NASDAQ:UROV), Utah Medical Products, Inc. (NASDAQ:UTMD), Midland States Bancorp, Inc. (NASDAQ:MSBI), The Manitowoc Company, Inc. (NYSE:MTW), Verona Pharma plc (NASDAQ:VRNA), Spero Therapeutics (NASDAQ:SPRO), and Kimball Electronics Inc (NASDAQ:KE). This group of stocks' market values are similar to CNCE's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UROV,6,39936,-1 UTMD,7,28875,0 MSBI,10,9359,0 MTW,21,30600,2 VRNA,11,136859,7 SPRO,12,87035,4 KE,13,19173,1 Average,11.4,50262,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $80 million in CNCE's case. The Manitowoc Company, Inc. (NYSE:MTW) is the most popular stock in this table. On the other hand Urovant Sciences Ltd. (NASDAQ:UROV) is the least popular one with only 6 bullish hedge fund positions. Concert Pharmaceuticals Inc (NASDAQ:CNCE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CNCE is 65.3. 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 CNCE as the stock returned 30.8% 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.