In this article you are going to find out whether hedge funds think Cytokinetics, Inc. (NASDAQ:CYTK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Cytokinetics, Inc. (NASDAQ:CYTK) a buy, sell, or hold? Investors who are in the know are buying. The number of bullish hedge fund bets improved by 2 in recent months. Our calculations also showed that CYTK 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). CYTK was in 22 hedge funds' portfolios at the end of the first quarter of 2020. There were 20 hedge funds in our database with CYTK holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_758434" align="aligncenter" width="400"] Nathan Fischel of DAFNA Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 review the new hedge fund action regarding Cytokinetics, Inc. (NASDAQ:CYTK).
Hedge fund activity in Cytokinetics, Inc. (NASDAQ:CYTK)
At Q1's end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CYTK over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of Cytokinetics, Inc. (NASDAQ:CYTK), with a stake worth $46.4 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Consonance Capital Management, which amassed a stake valued at $40.5 million. Driehaus Capital, Millennium Management, and Citadel Investment Group 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Cytokinetics, Inc. (NASDAQ:CYTK), around 4.33% of its 13F portfolio. Burrage Capital Management is also relatively very bullish on the stock, designating 3.56 percent of its 13F equity portfolio to CYTK.
Now, key money managers have jumped into Cytokinetics, Inc. (NASDAQ:CYTK) headfirst. Consonance Capital Management, managed by Mitchell Blutt, established the most outsized position in Cytokinetics, Inc. (NASDAQ:CYTK). Consonance Capital Management had $40.5 million invested in the company at the end of the quarter. Farallon Capital also made a $7.4 million investment in the stock during the quarter. The other funds with brand new CYTK positions are Bhagwan Jay Rao's Integral Health Asset Management, Christiana Goh Bardon's Burrage Capital Management, and Panayotis Takis Sparaggis's Alkeon Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Cytokinetics, Inc. (NASDAQ:CYTK) but similarly valued. These stocks are International Seaways, Inc. (NYSE:INSW), Talend S.A. (NASDAQ:TLND), Third Point Reinsurance Ltd (NYSE:TPRE), and Novavax, Inc. (NASDAQ:NVAX). All of these stocks' market caps are similar to CYTK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INSW,27,169817,5 TLND,29,332515,5 TPRE,17,40013,-3 NVAX,4,11335,1 Average,19.25,138420,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $206 million in CYTK's case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Novavax, Inc. (NASDAQ:NVAX) is the least popular one with only 4 bullish hedge fund positions. Cytokinetics, Inc. (NASDAQ:CYTK) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on CYTK as the stock returned 84.1% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.