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Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Tricida, Inc. (NASDAQ:TCDA) to find out whether there were any major changes in hedge funds' views.
Tricida, Inc. (NASDAQ:TCDA) was in 21 hedge funds' portfolios at the end of June. The all time high for this statistic is 24. TCDA shareholders have witnessed an increase in hedge fund interest recently. There were 20 hedge funds in our database with TCDA holdings at the end of March. Our calculations also showed that TCDA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a multitude of metrics stock traders use to value stocks. A pair of the most useful metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outperform the S&P 500 by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
Didric Cederholm of Lion Point Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a look at the fresh hedge fund action regarding Tricida, Inc. (NASDAQ:TCDA).
Do Hedge Funds Think TCDA Is A Good Stock To Buy Now?
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in TCDA over the last 24 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, OrbiMed Advisors was the largest shareholder of Tricida, Inc. (NASDAQ:TCDA), with a stake worth $41.5 million reported as of the end of June. Trailing OrbiMed Advisors was Point72 Asset Management, which amassed a stake valued at $20.8 million. Great Point Partners, Lion Point, and D E Shaw 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 Great Point Partners allocated the biggest weight to Tricida, Inc. (NASDAQ:TCDA), around 1.79% of its 13F portfolio. Lion Point is also relatively very bullish on the stock, earmarking 1.36 percent of its 13F equity portfolio to TCDA.
As one would reasonably expect, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, created the largest position in Tricida, Inc. (NASDAQ:TCDA). Millennium Management had $1.9 million invested in the company at the end of the quarter. Efrem Kamen's Pura Vida Investments also made a $0.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, Hal Mintz's Sabby Capital, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's now take a look at hedge fund activity in other stocks similar to Tricida, Inc. (NASDAQ:TCDA). These stocks are National Bankshares Inc. (NASDAQ:NKSH), Tyme Technologies, Inc. (NASDAQ:TYME), Jaguar Health, Inc. (NASDAQ:JAGX), CASI Pharmaceuticals Inc (NASDAQ:CASI), NewHold Investment Corp. (NASDAQ:NHIC), Alpine Immune Sciences, Inc. (NASDAQ:ALPN), and Irsa Inversiones y Rprsntcins SA (NYSE:IRS). This group of stocks' market valuations match TCDA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NKSH,5,18504,2 TYME,7,4861,2 JAGX,4,13266,-1 CASI,13,23843,3 NHIC,19,76587,3 ALPN,9,67141,-7 IRS,3,17292,0 Average,8.6,31642,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.6 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $100 million in TCDA's case. NewHold Investment Corp. (NASDAQ:NHIC) is the most popular stock in this table. On the other hand Irsa Inversiones y Rprsntcins SA (NYSE:IRS) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Tricida, Inc. (NASDAQ:TCDA) is more popular among hedge funds. Our overall hedge fund sentiment score for TCDA is 82.3. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately TCDA wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TCDA were disappointed as the stock returned 2.1% since the end of the second quarter (through 10/22) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.