It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren't usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index's returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you'd fail to beat the market. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated a return of 15.1% over the last 12 months (vs. 5.6% gain for SPY), with 53% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That's why we are going to go over recent hedge fund activity in Cytokinetics, Inc. (NASDAQ:CYTK).
Cytokinetics, Inc. (NASDAQ:CYTK) has experienced a decrease in hedge fund sentiment of late. CYTK was in 13 hedge funds' portfolios at the end of September. There were 14 hedge funds in our database with CYTK holdings at the end of the previous quarter. Our calculations also showed that CYTK isn't among the 30 most popular stocks among hedge funds.
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Let's take a gander at the latest hedge fund action encompassing Cytokinetics, Inc. (NASDAQ:CYTK).
What does the smart money think about Cytokinetics, Inc. (NASDAQ:CYTK)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2018. On the other hand, there were a total of 12 hedge funds with a bullish position in CYTK at the beginning of this year. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of Cytokinetics, Inc. (NASDAQ:CYTK), with a stake worth $51.1 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Lansdowne Partners, which amassed a stake valued at $26.1 million. Great Point Partners, Millennium Management, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Because Cytokinetics, Inc. (NASDAQ:CYTK) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedge funds that decided to sell off their entire stakes in the third quarter. Interestingly, Ken Griffin's Citadel Investment Group cut the largest position of the 700 funds monitored by Insider Monkey, worth an estimated $0.5 million in stock. Andrew Feldstein and Stephen Siderow's fund, Blue Mountain Capital, also said goodbye to its stock, about $0 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let's check out hedge fund activity in other stocks similar to Cytokinetics, Inc. (NASDAQ:CYTK). We will take a look at Ennis, Inc. (NYSE:EBF), Global Indemnity Limited (NASDAQ:GBLI), Old Line Bancshares, Inc. (NASDAQ:OLBK), and One Liberty Properties, Inc. (NYSE:OLP). This group of stocks' market valuations resemble CYTK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EBF,11,53495,0 GBLI,7,47327,2 OLBK,7,55120,-4 OLP,6,25637,-1 Average,7.75,45395,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $105 million in CYTK's case. Ennis, Inc. (NYSE:EBF) is the most popular stock in this table. On the other hand One Liberty Properties, Inc. (NYSE:OLP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Cytokinetics, Inc. (NASDAQ:CYTK) 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.