The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtKodiak Sciences Inc (NASDAQ:KOD) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Kodiak Sciences Inc (NASDAQ:KOD) investors should pay attention to an increase in hedge fund interest in recent months. KOD was in 12 hedge funds' portfolios at the end of March. There were 11 hedge funds in our database with KOD holdings at the end of the previous quarter. Our calculations also showed that KOD 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.
At the moment there are several formulas investors have at their disposal to appraise publicly traded companies. Some of the less known formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outperform their index-focused peers by a significant margin (see the details here).
[caption id="attachment_315022" align="aligncenter" width="382"] Michael Castor of Sio Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the new hedge fund action surrounding Kodiak Sciences Inc (NASDAQ:KOD).
What does smart money think about Kodiak Sciences Inc (NASDAQ:KOD)?
Heading into the second quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KOD over the last 18 quarters. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Baker Bros. Advisors was the largest shareholder of Kodiak Sciences Inc (NASDAQ:KOD), with a stake worth $552.1 million reported as of the end of September. Trailing Baker Bros. Advisors was Perceptive Advisors, which amassed a stake valued at $174.8 million. Driehaus Capital, Millennium Management, and Osterweis 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 Perceptive Advisors allocated the biggest weight to Kodiak Sciences Inc (NASDAQ:KOD), around 4.55% of its 13F portfolio. Baker Bros. Advisors is also relatively very bullish on the stock, setting aside 3.4 percent of its 13F equity portfolio to KOD.
Now, some big names were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, established the most valuable position in Kodiak Sciences Inc (NASDAQ:KOD). Driehaus Capital had $14.1 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $4.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Castor's Sio Capital, John Overdeck and David Siegel's Two Sigma Advisors, and Bruce Kovner's Caxton Associates LP.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Kodiak Sciences Inc (NASDAQ:KOD) but similarly valued. These stocks are Barnes Group Inc. (NYSE:B), Box, Inc. (NYSE:BOX), Cal-Maine Foods Inc (NASDAQ:CALM), and PacWest Bancorp (NASDAQ:PACW). This group of stocks' market caps resemble KOD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position B,11,14286,0 BOX,34,487198,-1 CALM,26,219068,11 PACW,23,121550,-8 Average,23.5,210526,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $770 million in KOD's case. Box, Inc. (NYSE:BOX) is the most popular stock in this table. On the other hand Barnes Group Inc. (NYSE:B) is the least popular one with only 11 bullish hedge fund positions. Kodiak Sciences Inc (NASDAQ:KOD) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. 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 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately KOD wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); KOD investors were disappointed as the stock returned 13.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.