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Hedge Funds Have Never Been This Bullish On Seres Therapeutics Inc (MCRB)

·6 min read

We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Seres Therapeutics Inc (NASDAQ:MCRB) based on that data.

Seres Therapeutics Inc (NASDAQ:MCRB) has seen an increase in enthusiasm from smart money lately. Seres Therapeutics Inc (NASDAQ:MCRB) was in 19 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 17 hedge funds in our database with MCRB positions at the end of the fourth quarter. Our calculations also showed that MCRB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Peter Kolchinsky of RA Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we're going to take a look at the fresh hedge fund action regarding Seres Therapeutics Inc (NASDAQ:MCRB).

Do Hedge Funds Think MCRB Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. By comparison, 4 hedge funds held shares or bullish call options in MCRB a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is MCRB A Good Stock To Buy?
Is MCRB A Good Stock To Buy?

Among these funds, ARK Investment Management held the most valuable stake in Seres Therapeutics Inc (NASDAQ:MCRB), which was worth $244.1 million at the end of the fourth quarter. On the second spot was RA Capital Management which amassed $76.1 million worth of shares. Point72 Asset Management, Ikarian Capital, and Opaleye Management 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 Opaleye Management allocated the biggest weight to Seres Therapeutics Inc (NASDAQ:MCRB), around 1.44% of its 13F portfolio. RA Capital Management is also relatively very bullish on the stock, earmarking 1.15 percent of its 13F equity portfolio to MCRB.

Now, key hedge funds have jumped into Seres Therapeutics Inc (NASDAQ:MCRB) headfirst. RA Capital Management, managed by Peter Kolchinsky, initiated the biggest position in Seres Therapeutics Inc (NASDAQ:MCRB). RA Capital Management had $76.1 million invested in the company at the end of the quarter. Neil Shahrestani's Ikarian Capital also made a $7.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Egen Atkinson and Michael Kramarz's Commodore Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Ken Griffin's Citadel Investment Group.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Seres Therapeutics Inc (NASDAQ:MCRB) but similarly valued. These stocks are Retail Opportunity Investments Corp (NASDAQ:ROIC), Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY), PROS Holdings, Inc. (NYSE:PRO), SM Energy Company (NYSE:SM), Sundial Growers Inc. (NASDAQ:SNDL), At Home Group Inc. (NYSE:HOME), and Cal-Maine Foods Inc (NASDAQ:CALM). This group of stocks' market caps are closest to MCRB's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ROIC,18,56076,1 HRMY,10,178876,2 PRO,12,268268,-8 SM,16,237416,-4 SNDL,7,18832,5 HOME,30,806839,-1 CALM,20,224111,-1 Average,16.1,255774,-0.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $256 million. That figure was $391 million in MCRB's case. At Home Group Inc. (NYSE:HOME) is the most popular stock in this table. On the other hand Sundial Growers Inc. (NASDAQ:SNDL) is the least popular one with only 7 bullish hedge fund positions. Seres Therapeutics Inc (NASDAQ:MCRB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MCRB is 63.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately MCRB wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MCRB were disappointed as the stock returned 1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.