With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH).
Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) shareholders have witnessed an increase in enthusiasm from smart money of late. DCPH was in 17 hedge funds' portfolios at the end of March. There were 15 hedge funds in our database with DCPH positions at the end of the previous quarter. Our calculations also showed that dcph isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a glance at the latest hedge fund action encompassing Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH).
What does smart money think about Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH)?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DCPH over the last 15 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, OrbiMed Advisors was the largest shareholder of Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), with a stake worth $84 million reported as of the end of March. Trailing OrbiMed Advisors was Redmile Group, which amassed a stake valued at $37.8 million. Millennium Management, Alkeon Capital Management, and Deerfield Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, some big names have jumped into Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) headfirst. Kingdon Capital, managed by Mark Kingdon, established the most valuable position in Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH). Kingdon Capital had $4.3 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also made a $3 million investment in the stock during the quarter. The following funds were also among the new DCPH investors: Michael S. Weiss and Lindsay A. Rosenwald's Opus Point Partners Management, Andrew Feldstein and Stephen Siderow's Blue Mountain Capital, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's now take a look at hedge fund activity in other stocks similar to Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH). We will take a look at The Gorman-Rupp Company (NYSE:GRC), PetIQ, Inc. (NASDAQ:PETQ), Par Pacific Holdings, Inc. (NYSE:PARR), and Mercer International Inc. (NASDAQ:MERC). This group of stocks' market values are similar to DCPH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GRC,7,38502,0 PETQ,13,86032,0 PARR,16,109870,0 MERC,14,141114,-2 Average,12.5,93880,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $216 million in DCPH's case. Par Pacific Holdings, Inc. (NYSE:PARR) is the most popular stock in this table. On the other hand The Gorman-Rupp Company (NYSE:GRC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on DCPH, though not to the same extent, as the stock returned 5.4% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.