The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Fate Therapeutics Inc (NASDAQ:FATE).
Fate Therapeutics Inc (NASDAQ:FATE) was in 17 hedge funds' portfolios at the end of September. FATE shareholders have witnessed an increase in hedge fund interest recently. There were 9 hedge funds in our database with FATE positions at the end of the previous quarter. Our calculations also showed that FATE isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the fresh hedge fund action surrounding Fate Therapeutics Inc (NASDAQ:FATE).
How have hedgies been trading Fate Therapeutics Inc (NASDAQ:FATE)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 89% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FATE over the last 13 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.
More specifically, Redmile Group was the largest shareholder of Fate Therapeutics Inc (NASDAQ:FATE), with a stake worth $172.3 million reported as of the end of September. Trailing Redmile Group was Casdin Capital, which amassed a stake valued at $41.5 million. Partner Fund Management, Deerfield Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key money managers were breaking ground themselves. Partner Fund Management, managed by Christopher James, created the largest position in Fate Therapeutics Inc (NASDAQ:FATE). Partner Fund Management had $24.5 million invested in the company at the end of the quarter. James E. Flynn's Deerfield Management also made a $19.1 million investment in the stock during the quarter. The following funds were also among the new FATE investors: Thomas Steyer's Farallon Capital, Jim Simons's Renaissance Technologies, and Ken Greenberg and David Kim's Ghost Tree Capital.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Fate Therapeutics Inc (NASDAQ:FATE) but similarly valued. These stocks are Eros International plc (NYSE:EROS), First Trust Europe AlphaDEX ETF (NASDAQ:FEP), Arbor Realty Trust, Inc. (NYSE:ABR), and Houghton Mifflin Harcourt Co (NASDAQ:HMHC). All of these stocks' market caps match FATE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EROS,3,20278,-1 FEP,1,369,0 ABR,10,24183,-1 HMHC,13,233945,-3 Average,6.75,69694,-1.25 [/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 $70 million. That figure was $309 million in FATE's case. Houghton Mifflin Harcourt Co (NASDAQ:HMHC) is the most popular stock in this table. On the other hand 0 is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Fate Therapeutics Inc (NASDAQ:FATE) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.