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 Fulcrum Therapeutics, Inc. (NASDAQ:FULC) based on those filings.
Fulcrum Therapeutics, Inc. (NASDAQ:FULC) investors should be aware of a decrease in hedge fund sentiment recently. Our calculations also showed that FULC 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Now let's take a look at the new hedge fund action surrounding Fulcrum Therapeutics, Inc. (NASDAQ:FULC).
What have hedge funds been doing with Fulcrum Therapeutics, Inc. (NASDAQ:FULC)?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FULC over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
More specifically, Casdin Capital was the largest shareholder of Fulcrum Therapeutics, Inc. (NASDAQ:FULC), with a stake worth $14.4 million reported as of the end of September. Trailing Casdin Capital was Perceptive Advisors, which amassed a stake valued at $7.2 million. Logos Capital, Harvard Management Co, and Millennium 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 Logos Capital allocated the biggest weight to Fulcrum Therapeutics, Inc. (NASDAQ:FULC), around 2.42% of its 13F portfolio. Casdin Capital is also relatively very bullish on the stock, designating 1.53 percent of its 13F equity portfolio to FULC.
Since Fulcrum Therapeutics, Inc. (NASDAQ:FULC) has experienced a decline in interest from the smart money, it's safe to say that there exists a select few funds who were dropping their full holdings by the end of the first quarter. At the top of the heap, Anand Parekh's Alyeska Investment Group said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, valued at close to $1.3 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also sold off its stock, about $0.6 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.
Let's now review hedge fund activity in other stocks similar to Fulcrum Therapeutics, Inc. (NASDAQ:FULC). These stocks are Trillium Therapeutics Inc. (NASDAQ:TRIL), dMY Technology Group, Inc. (NYSE:DMYT), One Liberty Properties, Inc. (NYSE:OLP), and Granite Point Mortgage Trust Inc. (NYSE:GPMT). This group of stocks' market valuations resemble FULC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRIL,25,122213,22 DMYT,21,101818,21 OLP,6,17617,1 GPMT,11,14191,2 Average,15.75,63960,11.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $36 million in FULC's case. Trillium Therapeutics Inc. (NASDAQ:TRIL) 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 Fulcrum Therapeutics, Inc. (NASDAQ:FULC) is even less popular than OLP. Hedge funds clearly dropped the ball on FULC as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on FULC as the stock returned 60.6% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.