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Do Hedge Funds Love Endocyte, Inc. (ECYT)?

Abigail Fisher

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Endocyte, Inc. (NASDAQ:ECYT) from the perspective of those elite funds.

Endocyte, Inc. (NASDAQ:ECYT) has experienced an increase in hedge fund interest lately. Our calculations also showed that ECYT isn't among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Kolchinsky

We're going to take a look at the key hedge fund action regarding Endocyte, Inc. (NASDAQ:ECYT).

What does the smart money think about Endocyte, Inc. (NASDAQ:ECYT)?

Heading into the fourth quarter of 2018, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards ECYT over the last 13 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

ECYT_dec2018

More specifically, RA Capital Management was the largest shareholder of Endocyte, Inc. (NASDAQ:ECYT), with a stake worth $110 million reported as of the end of September. Trailing RA Capital Management was venBio Select Advisor, which amassed a stake valued at $94.2 million. Deerfield Management, Baker Bros. Advisors, and Perceptive Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, key money managers have jumped into Endocyte, Inc. (NASDAQ:ECYT) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the most outsized position in Endocyte, Inc. (NASDAQ:ECYT). Point72 Asset Management had $37.4 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin's Great Point Partners also initiated a $28.5 million position during the quarter. The following funds were also among the new ECYT investors: Farallon Capital, Noam Gottesman's GLG Partners, and D. E. Shaw's D E Shaw.

Let's check out hedge fund activity in other stocks similar to Endocyte, Inc. (NASDAQ:ECYT). These stocks are NeoGenomics, Inc. (NASDAQ:NEO), PGT Innovations Inc. (NASDAQ:PGTI), Presidio, Inc. (NASDAQ:PSDO), and SUPERVALU INC. (NYSE:SVU). This group of stocks' market valuations are closest to ECYT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NEO,17,26803,4 PGTI,22,146257,2 PSDO,14,19163,8 SVU,17,160948,-1 Average,17.5,88293,3.25 [/table]

View table here if you experience formatting issues. As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $540 million in ECYT's case. PGT Innovations Inc. (NASDAQ:PGTI) is the most popular stock in this table. On the other hand Presidio, Inc. (NASDAQ:PSDO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Endocyte, Inc. (NASDAQ:ECYT) 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.

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