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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is DRNA a good stock to buy now? Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) investors should be aware of a decrease in activity from the world's largest hedge funds recently. Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) was in 31 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 35. Our calculations also showed that DRNA 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.
In the eyes of most traders, hedge funds are assumed to be underperforming, old financial tools of years past. While there are over 8000 funds in operation at present, Our experts hone in on the crème de la crème of this group, approximately 850 funds. Most estimates calculate that this group of people control the lion's share of the smart money's total capital, and by keeping track of their highest performing picks, Insider Monkey has spotted numerous investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
David Siegel of Two Sigma Advisors
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. Keeping this in mind let's go over the key hedge fund action surrounding Dicerna Pharmaceuticals Inc (NASDAQ:DRNA).
Do Hedge Funds Think DRNA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in DRNA a year ago. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). Citadel Investment Group has a $30.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Marc Schneidman of Aquilo Capital Management, with a $24.7 million position; 2.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism consist of Renaissance Technologies, Joseph Edelman's Perceptive Advisors and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position DAFNA Capital Management allocated the biggest weight to Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), around 2.66% of its 13F portfolio. Aquilo Capital Management is also relatively very bullish on the stock, earmarking 2.62 percent of its 13F equity portfolio to DRNA.
Due to the fact that Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) has experienced declining sentiment from the smart money, it's easy to see that there was a specific group of hedgies who sold off their full holdings in the third quarter. It's worth mentioning that Oleg Nodelman's EcoR1 Capital sold off the biggest investment of the "upper crust" of funds monitored by Insider Monkey, totaling close to $69.1 million in stock, and Richard Driehaus's Driehaus Capital was right behind this move, as the fund sold off about $25.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 4 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). These stocks are HNI Corp (NYSE:HNI), Bloomin' Brands Inc (NASDAQ:BLMN), Park National Corporation (NYSE:PRK), Gentherm Inc (NASDAQ:THRM), American Woodmark Corporation (NASDAQ:AMWD), BancFirst Corporation (NASDAQ:BANF), and Sirius International Insurance Group, Ltd. (NASDAQ:SG). This group of stocks' market values resemble DRNA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HNI,7,31809,-3 BLMN,30,284019,7 PRK,2,1867,-10 THRM,10,78230,-3 AMWD,15,42220,-1 BANF,4,3383,-9 SG,6,8559,4 Average,10.6,64298,-2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $184 million in DRNA's case. Bloomin' Brands Inc (NASDAQ:BLMN) is the most popular stock in this table. On the other hand Park National Corporation (NYSE:PRK) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) is more popular among hedge funds. Our overall hedge fund sentiment score for DRNA is 77.6. 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 returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on DRNA as the stock returned 23.5% since the end of September (through 12/18) 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.