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Hedge Funds Are Piling Into Zentalis Pharmaceuticals, Inc. (ZNTL)

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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL).

Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) investors should be aware of an increase in hedge fund sentiment of late. Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) was in 24 hedge funds' portfolios at the end of the second quarter of 2021. 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. Our calculations also showed that ZNTL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Ole Andreas Halvorsen Viking Global
Ole Andreas Halvorsen Viking Global

Ole Andreas Halvorsen of Viking Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. With all of this in mind let's review the fresh hedge fund action surrounding Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL).

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

At second quarter's end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ZNTL over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

The largest stake in Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) was held by 0, which reported holding $218.2 million worth of stock at the end of June. It was followed by Tybourne Capital Management with a $141.7 million position. Other investors bullish on the company included Viking Global, Citadel Investment Group, and Woodline Partners. In terms of the portfolio weights assigned to each position Copernicus Capital Management allocated the biggest weight to Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL), around 8.39% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, dishing out 2.98 percent of its 13F equity portfolio to ZNTL.

Consequently, key money managers have been driving this bullishness. EcoR1 Capital, managed by Oleg Nodelman, assembled the most outsized position in Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL). EcoR1 Capital had $10.6 million invested in the company at the end of the quarter. Frank Fu's CaaS Capital also made a $2.7 million investment in the stock during the quarter. The following funds were also among the new ZNTL investors: Matthew L Pinz's Pinz Capital, Devesh Gandhi's SilverArc Capital, and Thomas Bailard's Bailard Inc.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) but similarly valued. We will take a look at Everi Holdings Inc (NYSE:EVRI), Echostar Corporation (NASDAQ:SATS), KAR Auction Services Inc (NYSE:KAR), Victory Capital Holdings, Inc. (NASDAQ:VCTR), Seres Therapeutics Inc (NASDAQ:MCRB), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), and Kymera Therapeutics, Inc. (NASDAQ:KYMR). This group of stocks' market values are similar to ZNTL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVRI,31,319071,7 SATS,26,246543,-2 KAR,23,284975,1 VCTR,14,83647,0 MCRB,16,271391,-3 LGND,7,55674,-6 KYMR,21,448831,5 Average,19.7,244305,0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $244 million. That figure was $681 million in ZNTL's case. Everi Holdings Inc (NYSE:EVRI) is the most popular stock in this table. On the other hand Ligand Pharmaceuticals Inc. (NASDAQ:LGND) is the least popular one with only 7 bullish hedge fund positions. Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZNTL is 75.4. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on ZNTL as the stock returned 46.5% since the end of Q2 (through 10/22) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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