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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was IMARA Inc. (NASDAQ:IMRA).
Is IMARA Inc. (NASDAQ:IMRA) ready to rally soon? Money managers were in a pessimistic mood. The number of bullish hedge fund positions were trimmed by 1 recently. IMARA Inc. (NASDAQ:IMRA) was in 5 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. Our calculations also showed that IMRA isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 6 hedge funds in our database with IMRA holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are a large number of gauges market participants have at their disposal to grade their holdings. Some of the most underrated gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can outclass the broader indices by a healthy amount (see the details here).
James E. Flynn of Deerfield Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we're going to analyze the latest hedge fund action surrounding IMARA Inc. (NASDAQ:IMRA).
How have hedgies been trading IMARA Inc. (NASDAQ:IMRA)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IMRA over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, OrbiMed Advisors held the most valuable stake in IMARA Inc. (NASDAQ:IMRA), which was worth $55.3 million at the end of the third quarter. On the second spot was Deerfield Management which amassed $10.5 million worth of shares. Rock Springs Capital Management, RA Capital Management, and Renaissance Technologies 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 OrbiMed Advisors allocated the biggest weight to IMARA Inc. (NASDAQ:IMRA), around 0.7% of its 13F portfolio. Deerfield Management is also relatively very bullish on the stock, setting aside 0.26 percent of its 13F equity portfolio to IMRA.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified IMRA as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as IMARA Inc. (NASDAQ:IMRA) but similarly valued. We will take a look at Alliance Resource Partners, L.P. (NASDAQ:ARLP), Dynex Capital Inc (NYSE:DX), MRC Global Inc (NYSE:MRC), MEI Pharma Inc (NASDAQ:MEIP), AC Immune SA (NASDAQ:ACIU), MBIA Inc. (NYSE:MBI), and Oceaneering International (NYSE:OII). All of these stocks' market caps are closest to IMRA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARLP,4,16859,0 DX,8,7739,4 MRC,18,26533,0 MEIP,16,59453,-4 ACIU,11,61021,1 MBI,16,65059,0 OII,18,30144,1 Average,13,38115,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $78 million in IMRA's case. MRC Global Inc (NYSE:MRC) is the most popular stock in this table. On the other hand Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the least popular one with only 4 bullish hedge fund positions. IMARA Inc. (NASDAQ:IMRA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IMRA is 26.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on IMRA as the stock returned 42.6% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.