The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Cerus Corporation (NASDAQ:CERS) from the perspective of those elite funds.
Cerus Corporation (NASDAQ:CERS) has experienced an increase in hedge fund sentiment in recent months. CERS was in 17 hedge funds' portfolios at the end of March. There were 15 hedge funds in our database with CERS positions at the end of the previous quarter. Our calculations also showed that cers isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We're going to take a glance at the latest hedge fund action encompassing Cerus Corporation (NASDAQ:CERS).
What does smart money think about Cerus Corporation (NASDAQ:CERS)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in CERS over the last 15 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in Cerus Corporation (NASDAQ:CERS) was held by Baker Bros. Advisors, which reported holding $67 million worth of stock at the end of March. It was followed by Rima Senvest Management with a $11.1 million position. Other investors bullish on the company included Millennium Management, Point72 Asset Management, and D E Shaw.
As industrywide interest jumped, key hedge funds were leading the bulls' herd. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in Cerus Corporation (NASDAQ:CERS). Point72 Asset Management had $4.8 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also made a $1.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Jeffrey Talpins's Element Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Cerus Corporation (NASDAQ:CERS). We will take a look at Global Cord Blood Corp (NYSE:CO), Carbonite Inc (NASDAQ:CARB), Nightstar Therapeutics plc (NASDAQ:NITE), and Omeros Corporation (NASDAQ:OMER). This group of stocks' market caps are similar to CERS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CO,8,32681,1 CARB,20,145949,4 NITE,14,119090,6 OMER,6,98765,-1 Average,12,99121,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $108 million in CERS's case. Carbonite Inc (NASDAQ:CARB) is the most popular stock in this table. On the other hand Omeros Corporation (NASDAQ:OMER) is the least popular one with only 6 bullish hedge fund positions. Cerus Corporation (NASDAQ:CERS) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately CERS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on CERS were disappointed as the stock returned -21% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.