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In this article we will take a look at whether hedge funds think Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) an outstanding investment today? The smart money was taking a pessimistic view. The number of bullish hedge fund positions were trimmed by 13 lately. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) was in 23 hedge funds' portfolios at the end of March. The all time high for this statistic is 36. Our calculations also showed that DCPH isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 36 hedge funds in our database with DCPH holdings at the end of December.
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Aaron Cowen of Suvretta Capital Management
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Do Hedge Funds Think DCPH Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -36% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in DCPH a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Redmile Group held the most valuable stake in Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), which was worth $195.1 million at the end of the fourth quarter. On the second spot was OrbiMed Advisors which amassed $61.9 million worth of shares. Consonance Capital Management, Avoro Capital Advisors (venBio Select Advisor), and Alkeon Capital Management 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 Consonance Capital Management allocated the biggest weight to Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), around 4.75% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, setting aside 2.75 percent of its 13F equity portfolio to DCPH.
Judging by the fact that Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that slashed their entire stakes by the end of the first quarter. Intriguingly, Jerome Pfund and Michael Sjostrom's Sectoral Asset Management dumped the biggest investment of the 750 funds watched by Insider Monkey, worth close to $27.9 million in stock, and Arthur B Cohen and Joseph Healey's Healthcor Management LP was right behind this move, as the fund said goodbye to about $7.9 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 13 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) but similarly valued. We will take a look at MGE Energy, Inc. (NASDAQ:MGEE), Cadence Bancorporation (NYSE:CADE), Winnebago Industries, Inc. (NYSE:WGO), Uniti Group Inc. (NASDAQ:UNIT), Nova Measuring Instruments Ltd. (NASDAQ:NVMI), Manchester United PLC (NYSE:MANU), and Skyline Champion Corporation (NYSE:SKY). All of these stocks' market caps resemble DCPH's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MGEE,8,37474,2 CADE,27,176068,8 WGO,30,440894,3 UNIT,17,306823,0 NVMI,16,342917,0 MANU,16,47723,5 SKY,23,279371,0 Average,19.6,233039,2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $233 million. That figure was $512 million in DCPH's case. Winnebago Industries, Inc. (NYSE:WGO) is the most popular stock in this table. On the other hand MGE Energy, Inc. (NASDAQ:MGEE) is the least popular one with only 8 bullish hedge fund positions. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DCPH is 45.3. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately DCPH wasn't nearly as popular as these 5 stocks and hedge funds that were betting on DCPH were disappointed as the stock returned -24% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.