We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of September 30th. In this article, we look at what those funds think of Eidos Therapeutics, Inc. (NASDAQ:EIDX) based on that data.
Eidos Therapeutics, Inc. (NASDAQ:EIDX) was in 14 hedge funds' portfolios at the end of the third quarter of 2018. EIDX investors should be aware of a decrease in enthusiasm from smart money of late. There were 16 hedge funds in our database with EIDX positions at the end of the previous quarter. Our calculations also showed that EIDX 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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to go over the latest hedge fund action encompassing Eidos Therapeutics, Inc. (NASDAQ:EIDX).
How are hedge funds trading Eidos Therapeutics, Inc. (NASDAQ:EIDX)?
At Q3's end, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EIDX over the last 13 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, RA Capital Management was the largest shareholder of Eidos Therapeutics, Inc. (NASDAQ:EIDX), with a stake worth $21.6 million reported as of the end of September. Trailing RA Capital Management was Viking Global, which amassed a stake valued at $19.8 million. Redmile Group, Perceptive Advisors, and Deerfield Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Eidos Therapeutics, Inc. (NASDAQ:EIDX) has experienced bearish sentiment from the smart money, it's easy to see that there was a specific group of money managers that elected to cut their entire stakes by the end of the third quarter. Intriguingly, Israel Englander's Millennium Management sold off the largest position of the 700 funds followed by Insider Monkey, valued at close to $5.7 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dumped about $0.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Eidos Therapeutics, Inc. (NASDAQ:EIDX). These stocks are Dynex Capital Inc (NYSE:DX), Evolution Petroleum Corporation (NYSE:EPM), Digi International Inc. (NASDAQ:DGII), and Regalwood Global Energy Ltd. (NYSE:RWGE). This group of stocks' market caps resemble EIDX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DX,5,9907,-2 EPM,14,28529,3 DGII,10,23735,2 RWGE,16,119432,0 Average,11.25,45401,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $69 million in EIDX's case. Regalwood Global Energy Ltd. (NYSE:RWGE) is the most popular stock in this table. On the other hand Dynex Capital Inc (NYSE:DX) is the least popular one with only 5 bullish hedge fund positions. Eidos Therapeutics, Inc. (NASDAQ:EIDX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard RWGE might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.