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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) in this article.
Is DRNA stock a buy? Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) investors should pay attention to a decrease in hedge fund interest lately. Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) was in 29 hedge funds' portfolios at the end of December. 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 Q4 rankings).
In the financial world there are a lot of methods investors have at their disposal to grade their holdings. A duo of the most innovative methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outperform the market by a superb margin (see the details here).
Joseph Edelman of Perceptive Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 review the recent hedge fund action surrounding Dicerna Pharmaceuticals Inc (NASDAQ:DRNA).
Do Hedge Funds Think DRNA Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DRNA over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the most valuable position in Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). Point72 Asset Management has a $52.1 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $41.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Michael Rockefeller and Karl Kroeker's Woodline Partners, Marc Schneidman's Aquilo Capital Management and Joseph Edelman's Perceptive Advisors. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to Dicerna Pharmaceuticals Inc (NASDAQ:DRNA), around 6.21% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, setting aside 3.85 percent of its 13F equity portfolio to DRNA.
Judging by the fact that Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few fund managers that decided to sell off their positions entirely last quarter. Interestingly, Roberto Mignone's Bridger Management dropped the largest investment of the "upper crust" of funds tracked by Insider Monkey, valued at about $9 million in stock, and Bhagwan Jay Rao's Integral Health Asset Management was right behind this move, as the fund sold off about $1.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Dicerna Pharmaceuticals Inc (NASDAQ:DRNA) but similarly valued. We will take a look at Hercules Capital Inc (NYSE:HTGC), Virtus Investment Partners Inc (NASDAQ:VRTS), Hutchison China MediTech Limited (NASDAQ:HCM), DiamondRock Hospitality Company (NYSE:DRH), Columbia Property Trust Inc (NYSE:CXP), Super Micro Computer, Inc. (NASDAQ:SMCI), and FB Financial Corporation (NYSE:FBK). All of these stocks' market caps are closest to DRNA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HTGC,12,42092,-1 VRTS,20,106385,6 HCM,6,34080,1 DRH,13,100472,-1 CXP,13,42446,-2 SMCI,20,402270,1 FBK,9,67465,0 Average,13.3,113601,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.3 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $288 million in DRNA's case. Virtus Investment Partners Inc (NASDAQ:VRTS) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 6 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 77.9. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.2% in 2021 through April 12th but still managed to beat the market by 1.5 percentage points. Hedge funds were also right about betting on DRNA as the stock returned 18.8% since the end of December (through 4/12) 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.