We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) and determine whether hedge funds skillfully traded this stock.
Is BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) worth your attention right now? Money managers were becoming more confident. The number of long hedge fund positions inched up by 3 lately. Our calculations also showed that BCRX isn't among the 30 most popular stocks among hedge funds (click for Q1 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 multitude of signals stock traders employ to analyze stocks. A pair of the most useful signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite fund managers can outpace their index-focused peers by a solid margin (see the details here).
[caption id="attachment_745225" align="aligncenter" width="400"] Noam Gottesman of GLG Partners[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Now we're going to take a gander at the fresh hedge fund action regarding BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX).
How are hedge funds trading BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX)?
Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards BCRX over the last 18 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) was held by Baker Bros. Advisors, which reported holding $21.9 million worth of stock at the end of September. It was followed by Eversept Partners with a $15.1 million position. Other investors bullish on the company included Adage Capital Management, Millennium Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), around 3.82% of its 13F portfolio. Ghost Tree Capital is also relatively very bullish on the stock, setting aside 1.06 percent of its 13F equity portfolio to BCRX.
Now, specific money managers have jumped into BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). Balyasny Asset Management had $6 million invested in the company at the end of the quarter. Kerr Neilson's Platinum Asset Management also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Manfred Yu's Acuta Capital Partners, Paul Marshall and Ian Wace's Marshall Wace LLP, and David M. Knott's Dorset Management.
Let's go over hedge fund activity in other stocks similar to BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). We will take a look at Daily Journal Corporation (NASDAQ:DJCO), DURECT Corporation (NASDAQ:DRRX), Autolus Therapeutics plc (NASDAQ:AUTL), and Cellular Biomedicine Group, Inc. (NASDAQ:CBMG). This group of stocks' market values are closest to BCRX's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DJCO,2,466,-2 DRRX,9,48947,2 AUTL,13,22079,2 CBMG,3,14664,1 Average,6.75,21539,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $114 million in BCRX's case. Autolus Therapeutics plc (NASDAQ:AUTL) is the most popular stock in this table. On the other hand Daily Journal Corporation (NASDAQ:DJCO) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BCRX as the stock returned 138% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.