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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Cortexyme, Inc. (NASDAQ:CRTX) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Is Cortexyme (CRTX) a good stock to buy now? Hedge funds were taking a bullish view. The number of bullish hedge fund bets increased by 1 lately. Cortexyme, Inc. (NASDAQ:CRTX) was in 7 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that CRTX 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.
Paul Marshall of Marshall Wace
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. Now let's take a peek at the recent hedge fund action surrounding Cortexyme, Inc. (NASDAQ:CRTX).
What does smart money think about Cortexyme, Inc. (NASDAQ:CRTX)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in CRTX a year ago. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
The largest stake in Cortexyme, Inc. (NASDAQ:CRTX) was held by Citadel Investment Group, which reported holding $15.2 million worth of stock at the end of September. It was followed by Ikarian Capital with a $2 million position. Other investors bullish on the company included Marshall Wace LLP, Endurant Capital Management, and D E Shaw. In terms of the portfolio weights assigned to each position Endurant Capital Management allocated the biggest weight to Cortexyme, Inc. (NASDAQ:CRTX), around 0.32% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to CRTX.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Ikarian Capital, managed by Neil Shahrestani, initiated the biggest position in Cortexyme, Inc. (NASDAQ:CRTX). Ikarian Capital had $2 million invested in the company at the end of the quarter. Vishal Saluja and Pham Quang's Endurant Capital Management also initiated a $1.1 million position during the quarter.
Let's now take a look at hedge fund activity in other stocks similar to Cortexyme, Inc. (NASDAQ:CRTX). We will take a look at Yelp Inc (NYSE:YELP), United Community Banks Inc (NASDAQ:UCBI), WestAmerica Bancorp. (NASDAQ:WABC), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), MicroStrategy Incorporated (NASDAQ:MSTR), La-Z-Boy Incorporated (NYSE:LZB), and Onto Innovation Inc. (NYSE:ONTO). This group of stocks' market values are closest to CRTX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YELP,27,374901,0 UCBI,13,38908,-4 WABC,12,23440,0 NVMI,11,212026,-2 MSTR,20,87203,-6 LZB,20,67843,-1 ONTO,15,114223,-2 Average,16.9,131221,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $21 million in CRTX's case. Yelp Inc (NYSE:YELP) is the most popular stock in this table. On the other hand Nova Measuring Instruments Ltd. (NASDAQ:NVMI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Cortexyme, Inc. (NASDAQ:CRTX) is even less popular than NVMI. Our overall hedge fund sentiment score for CRTX is 36. 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. Hedge funds dodged a bullet by taking a bearish stance towards CRTX. Our calculations showed that the top 20 most popular hedge fund stocks 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 but managed to beat the market again by 16 percentage points. Unfortunately CRTX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); CRTX investors were disappointed as the stock returned -5.6% since the end of the third quarter (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 so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.