The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) was in 31 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. DCPH has experienced an increase in hedge fund interest recently. There were 28 hedge funds in our database with DCPH positions at the end of the first quarter. Our calculations also showed that DCPH isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind we're going to take a gander at the new hedge fund action regarding Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH).
Hedge fund activity in Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH)
Heading into the third quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards DCPH over the last 20 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jeremy Green's Redmile Group has the largest position in Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), worth close to $297.3 million, accounting for 5.5% of its total 13F portfolio. Coming in second is Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, which holds a $111.1 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Samuel Isaly's OrbiMed Advisors, Farallon Capital and Panayotis Takis Sparaggis's Alkeon Capital Management. In terms of the portfolio weights assigned to each position Redmile Group allocated the biggest weight to Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), around 5.49% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, designating 4.04 percent of its 13F equity portfolio to DCPH.
As industrywide interest jumped, specific money managers have jumped into Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) headfirst. D E Shaw, managed by D. E. Shaw, initiated the biggest position in Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH). D E Shaw had $1.3 million invested in the company at the end of the quarter. Schonfeld Strategic Advisors also initiated a $1.2 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Andre F. Perold's HighVista Strategies, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's also examine hedge fund activity in other stocks similar to Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH). We will take a look at Clean Harbors Inc (NYSE:CLH), PTC Therapeutics, Inc. (NASDAQ:PTCT), Air Lease Corp (NYSE:AL), PennyMac Financial Services Inc (NYSE:PFSI), ADC Therapeutics SA (NYSE:ADCT), MasTec, Inc. (NYSE:MTZ), and Colfax Corporation (NYSE:CFX). This group of stocks' market values resemble DCPH's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLH,19,237400,-6 PTCT,31,278428,3 AL,22,618666,2 PFSI,25,351948,1 ADCT,15,490195,15 MTZ,29,160492,5 CFX,39,607479,7 Average,25.7,392087,3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $392 million. That figure was $761 million in DCPH's case. Colfax Corporation (NYSE:CFX) is the most popular stock in this table. On the other hand ADC Therapeutics SA (NYSE:ADCT) is the least popular one with only 15 bullish hedge fund positions. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DCPH is 71.3. 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. This is a slightly positive signal but 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately DCPH wasn't nearly as popular as these 10 stocks and hedge funds that were betting on DCPH were disappointed as the stock returned -16.2% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.