At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Nektar Therapeutics (NASDAQ:NKTR) at the end of the first quarter and determine whether the smart money was really smart about this stock.
Is Nektar Therapeutics (NASDAQ:NKTR) worth your attention right now? Investors who are in the know were turning less bullish. The number of bullish hedge fund bets went down by 9 lately. Our calculations also showed that NKTR 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.
Today there are tons of methods investors use to appraise their holdings. Two of the less utilized methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace the market by a superb amount (see the details here).
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we're going to analyze the new hedge fund action encompassing Nektar Therapeutics (NASDAQ:NKTR).
How are hedge funds trading Nektar Therapeutics (NASDAQ:NKTR)?
Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -35% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NKTR over the last 18 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Maverick Capital held the most valuable stake in Nektar Therapeutics (NASDAQ:NKTR), which was worth $87.4 million at the end of the third quarter. On the second spot was Camber Capital Management which amassed $53.6 million worth of shares. Rhenman & Partners Asset Management, Osterweis Capital Management, and Citadel Investment Group 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 Camber Capital Management allocated the biggest weight to Nektar Therapeutics (NASDAQ:NKTR), around 3.2% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, setting aside 2.69 percent of its 13F equity portfolio to NKTR.
Since Nektar Therapeutics (NASDAQ:NKTR) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there is a sect of fund managers that decided to sell off their full holdings last quarter. At the top of the heap, Stanley Druckenmiller's Duquesne Capital dropped the largest investment of the "upper crust" of funds monitored by Insider Monkey, totaling about $6.7 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund said goodbye to about $4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 9 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to Nektar Therapeutics (NASDAQ:NKTR). We will take a look at Balchem Corporation (NASDAQ:BCPC), Sibanye Stillwater Limited (NYSE:SBSW), Blueprint Medicines Corporation (NASDAQ:BPMC), and Western Alliance Bancorporation (NYSE:WAL). This group of stocks' market values match NKTR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCPC,13,56015,1 SBSW,19,83948,6 BPMC,36,762086,-1 WAL,27,137471,-5 Average,23.75,259880,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $198 million in NKTR's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Balchem Corporation (NASDAQ:BCPC) is the least popular one with only 13 bullish hedge fund positions. Nektar Therapeutics (NASDAQ:NKTR) is not the least popular stock in this group but hedge fund interest is still below average. 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 gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on NKTR as the stock returned 32.5% since the end of March and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.