How do we determine whether Ra Pharmaceuticals, Inc. (NASDAQ:RARX) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Ra Pharmaceuticals, Inc. (NASDAQ:RARX) the right investment to pursue these days? Investors who are in the know are betting on the stock. The number of long hedge fund positions improved by 3 recently. Our calculations also showed that rarx isn't among the 30 most popular stocks among hedge funds. RARX was in 20 hedge funds' portfolios at the end of March. There were 17 hedge funds in our database with RARX holdings at the end of the previous quarter.
To most shareholders, hedge funds are perceived as underperforming, old investment tools of the past. While there are more than 8000 funds in operation at present, We look at the crème de la crème of this club, around 750 funds. These money managers watch over most of the hedge fund industry's total capital, and by paying attention to their top picks, Insider Monkey has uncovered numerous investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We're going to take a glance at the latest hedge fund action surrounding Ra Pharmaceuticals, Inc. (NASDAQ:RARX).
How are hedge funds trading Ra Pharmaceuticals, Inc. (NASDAQ:RARX)?
At the end of the first quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards RARX over the last 15 quarters. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Ra Pharmaceuticals, Inc. (NASDAQ:RARX) was held by RA Capital Management, which reported holding $108.8 million worth of stock at the end of March. It was followed by Deerfield Management with a $33.6 million position. Other investors bullish on the company included Baker Bros. Advisors, Rock Springs Capital Management, and Sectoral Asset Management.
As industrywide interest jumped, specific money managers have been driving this bullishness. Ghost Tree Capital, managed by Ken Greenberg and David Kim, assembled the biggest position in Ra Pharmaceuticals, Inc. (NASDAQ:RARX). Ghost Tree Capital had $6.7 million invested in the company at the end of the quarter. Richard Driehaus's Driehaus Capital also made a $5.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's go over hedge fund activity in other stocks similar to Ra Pharmaceuticals, Inc. (NASDAQ:RARX). We will take a look at Coherus Biosciences Inc (NASDAQ:CHRS), CONSOL Energy Inc. (NYSE:CEIX), Denbury Resources Inc. (NYSE:DNR), and Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM). All of these stocks' market caps match RARX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHRS,27,199168,7 CEIX,19,130215,-6 DNR,17,43885,-4 RYTM,11,188006,1 Average,18.5,140319,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $140 million. That figure was $268 million in RARX's case. Coherus Biosciences Inc (NASDAQ:CHRS) is the most popular stock in this table. On the other hand Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) is the least popular one with only 11 bullish hedge fund positions. Ra Pharmaceuticals, Inc. (NASDAQ:RARX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on RARX, though not to the same extent, as the stock returned 0.9% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.