The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Nektar Therapeutics (NASDAQ:NKTR) based on those filings.
Nektar Therapeutics (NASDAQ:NKTR) investors should be aware of a decrease in enthusiasm from smart money lately. NKTR was in 17 hedge funds' portfolios at the end of March. There were 26 hedge funds in our database with NKTR holdings at the end of the previous quarter. Our calculations also showed that NKTR isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26388" align="aligncenter" width="392"] Lee Ainslie of Maverick Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's go over the latest hedge fund action encompassing Nektar Therapeutics (NASDAQ:NKTR).
How are hedge funds trading Nektar Therapeutics (NASDAQ:NKTR)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -35% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards NKTR over the last 18 quarters. 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, Maverick Capital held the most valuable stake in Nektar Therapeutics (NASDAQ:NKTR), which was worth $87.4 million at the end of the third quarter. On the second spot was Camber Capital Management which amassed $53.6 million worth of shares. Rhenman & Partners Asset Management, Osterweis Capital Management, and Citadel Investment Group 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 Camber Capital Management allocated the biggest weight to Nektar Therapeutics (NASDAQ:NKTR), around 3.2% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, designating 2.69 percent of its 13F equity portfolio to NKTR.
Seeing as Nektar Therapeutics (NASDAQ:NKTR) has experienced declining sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few funds who sold off their full holdings in the first quarter. Interestingly, Stanley Druckenmiller's Duquesne Capital cut the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling about $6.7 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund sold off about $4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 9 funds in the first quarter.
Let's go over hedge fund activity in other stocks similar to Nektar Therapeutics (NASDAQ:NKTR). We will take a look at Balchem Corporation (NASDAQ:BCPC), Sibanye Stillwater Limited (NYSE:SBSW), Blueprint Medicines Corporation (NASDAQ:BPMC), and Western Alliance Bancorporation (NYSE:WAL). This group of stocks' market values resemble NKTR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BCPC,13,56015,1 SBSW,19,83948,6 BPMC,36,762086,-1 WAL,27,137471,-5 Average,23.75,259880,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $198 million in NKTR's case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand Balchem Corporation (NASDAQ:BCPC) is the least popular one with only 13 bullish hedge fund positions. Nektar Therapeutics (NASDAQ:NKTR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on NKTR as the stock returned 31.3% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.