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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Chimerix Inc (NASDAQ:CMRX) and determine whether the smart money was really smart about this stock.
Is Chimerix Inc (NASDAQ:CMRX) a marvelous stock to buy now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund positions advanced by 2 recently. Our calculations also showed that CMRX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Cliff Asness of AQR Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a gander at the latest hedge fund action regarding Chimerix Inc (NASDAQ:CMRX).
How are hedge funds trading Chimerix Inc (NASDAQ:CMRX)?
Heading into the second quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards CMRX over the last 18 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Chimerix Inc (NASDAQ:CMRX), which was worth $4.7 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $2 million worth of shares. Point72 Asset Management, Two Sigma Advisors, and AQR Capital 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 Tang Capital Management allocated the biggest weight to Chimerix Inc (NASDAQ:CMRX), around 0.09% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to CMRX.
Consequently, key money managers have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in Chimerix Inc (NASDAQ:CMRX). Point72 Asset Management had $1.4 million invested in the company at the end of the quarter. Kevin C. Tang's Tang Capital Management also initiated a $0.6 million position during the quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Chimerix Inc (NASDAQ:CMRX) but similarly valued. We will take a look at ContraFect Corp (NASDAQ:CFRX), Fluent, Inc. (NASDAQ:FLNT), Five Star Senior Living Inc. (NYSE:FVE), and DASAN Zhone Solutions, Inc. (NASDAQ:DZSI). This group of stocks' market valuations resemble CMRX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CFRX,5,4605,-2 FLNT,7,996,-1 FVE,7,11825,5 DZSI,5,2817,-1 Average,6,5061,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $13 million in CMRX's case. Fluent, Inc. (NASDAQ:FLNT) is the most popular stock in this table. On the other hand ContraFect Corp (NASDAQ:CFRX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Chimerix Inc (NASDAQ:CMRX) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on CMRX as the stock returned 115.3% in Q2 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.
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Disclosure: None. This article was originally published at Insider Monkey.