After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Denali Therapeutics Inc. (NASDAQ:DNLI).
Denali Therapeutics Inc. (NASDAQ:DNLI) has experienced an increase in hedge fund sentiment recently. DNLI was in 5 hedge funds' portfolios at the end of December. There were 4 hedge funds in our database with DNLI positions at the end of the previous quarter. Our calculations also showed that dnli isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's review the latest hedge fund action surrounding Denali Therapeutics Inc. (NASDAQ:DNLI).
How have hedgies been trading Denali Therapeutics Inc. (NASDAQ:DNLI)?
Heading into the first quarter of 2019, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the previous quarter. On the other hand, there were a total of 3 hedge funds with a bullish position in DNLI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Jasper Ridge Partners was the largest shareholder of Denali Therapeutics Inc. (NASDAQ:DNLI), with a stake worth $5.8 million reported as of the end of September. Trailing Jasper Ridge Partners was Caxton Associates LP, which amassed a stake valued at $2.8 million. Casdin Capital, Mark Asset Management, and Springbok Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, specific money managers have been driving this bullishness. Casdin Capital, managed by Eli Casdin, established the most outsized position in Denali Therapeutics Inc. (NASDAQ:DNLI). Casdin Capital had $2.1 million invested in the company at the end of the quarter. Morris Mark's Mark Asset Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Denali Therapeutics Inc. (NASDAQ:DNLI) but similarly valued. We will take a look at Sotheby's (NYSE:BID), Jagged Peak Energy Inc. (NYSE:JAG), Lexington Realty Trust (NYSE:LXP), and Altair Engineering Inc. (NASDAQ:ALTR). All of these stocks' market caps are closest to DNLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BID,16,359130,-9 JAG,10,84418,-5 LXP,16,41352,3 ALTR,14,62260,1 Average,14,136790,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $11 million in DNLI's case. Sotheby's (NYSE:BID) is the most popular stock in this table. On the other hand Jagged Peak Energy Inc. (NYSE:JAG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Denali Therapeutics Inc. (NASDAQ:DNLI) is even less popular than JAG. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on DNLI, though not to the same extent, as the stock returned 20.2% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.