With the first-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 second quarter. One of these stocks was Mirati Therapeutics, Inc. (NASDAQ:MRTX).
Mirati Therapeutics, Inc. (NASDAQ:MRTX) shareholders have witnessed an increase in hedge fund interest of late. MRTX was in 33 hedge funds' portfolios at the end of the third quarter of 2019. There were 27 hedge funds in our database with MRTX positions at the end of the previous quarter. Our calculations also showed that MRTX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_341400" align="aligncenter" width="600"] Samuel Isaly of OrbiMed Advisors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's go over the latest hedge fund action surrounding Mirati Therapeutics, Inc. (NASDAQ:MRTX).
Hedge fund activity in Mirati Therapeutics, Inc. (NASDAQ:MRTX)
Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MRTX over the last 17 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.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, venBio Select Advisor, managed by Behzad Aghazadeh, holds the largest position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). venBio Select Advisor has a $292.2 million position in the stock, comprising 12.2% of its 13F portfolio. The second most bullish fund manager is Perceptive Advisors, managed by Joseph Edelman, which holds a $258.2 million position; the fund has 7% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Bihua Chen's Cormorant Asset Management, Julian Baker and Felix Baker's Baker Bros. Advisors and Steve Cohen's Point72 Asset Management. In terms of the portfolio weights assigned to each position venBio Select Advisor allocated the biggest weight to Mirati Therapeutics, Inc. (NASDAQ:MRTX), around 12.19% of its portfolio. Cormorant Asset Management is also relatively very bullish on the stock, setting aside 7.59 percent of its 13F equity portfolio to MRTX.
As one would reasonably expect, key money managers were leading the bulls' herd. OrbiMed Advisors, managed by Samuel Isaly, created the most outsized position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). OrbiMed Advisors had $41.7 million invested in the company at the end of the quarter. Christopher James's Partner Fund Management also initiated a $33.6 million position during the quarter. The other funds with brand new MRTX positions are Steve Cohen's Point72 Asset Management, Israel Englander's Millennium Management, and Brandon Haley's Holocene Advisors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Mirati Therapeutics, Inc. (NASDAQ:MRTX) but similarly valued. These stocks are Atlantic Union Bankshares Corporation (NASDAQ:AUB), NuStar Energy L.P. (NYSE:NS), SiteOne Landscape Supply, Inc. (NYSE:SITE), and Regal Beloit Corporation (NYSE:RBC). This group of stocks' market valuations match MRTX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AUB,3,19925,0 NS,2,1883,0 SITE,13,53748,1 RBC,18,205507,1 Average,9,70266,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $1155 million in MRTX's case. Regal Beloit Corporation (NYSE:RBC) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Mirati Therapeutics, Inc. (NASDAQ:MRTX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on MRTX as the stock returned 29.3% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.