We at Insider Monkey have gone over 752 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 September 30th. In this article, we look at what those funds think of IDEAYA Biosciences, Inc. (NASDAQ:IDYA) based on that data.
Hedge fund interest in IDEAYA Biosciences, Inc. (NASDAQ:IDYA) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare IDYA to other stocks including Zagg Inc (NASDAQ:ZAGG), Clipper Realty Inc. (NYSE:CLPR), and RADA Electronic Industries Ltd. (NASDAQ:RADA) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_364894" align="alignnone" width="864"] James E. Flynn of Deerfield Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We're going to take a look at the key hedge fund action regarding IDEAYA Biosciences, Inc. (NASDAQ:IDYA).
What have hedge funds been doing with IDEAYA Biosciences, Inc. (NASDAQ:IDYA)?
At Q3's end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in IDYA a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Biotechnology Value Fund was the largest shareholder of IDEAYA Biosciences, Inc. (NASDAQ:IDYA), with a stake worth $13 million reported as of the end of September. Trailing Biotechnology Value Fund was Perceptive Advisors, which amassed a stake valued at $9.6 million. Deerfield Management, Baker Bros. Advisors, and Point72 Asset 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 Biotechnology Value Fund allocated the biggest weight to IDEAYA Biosciences, Inc. (NASDAQ:IDYA), around 1.36% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to IDYA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's also examine hedge fund activity in other stocks similar to IDEAYA Biosciences, Inc. (NASDAQ:IDYA). We will take a look at Zagg Inc (NASDAQ:ZAGG), Clipper Realty Inc. (NYSE:CLPR), RADA Electronic Industries Ltd. (NASDAQ:RADA), and Eloxx Pharmaceuticals, Inc. (NASDAQ:ELOX). This group of stocks' market values resemble IDYA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ZAGG,6,19642,-5 CLPR,7,36891,0 RADA,2,3466,-1 ELOX,3,1869,1 Average,4.5,15467,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $32 million in IDYA's case. Clipper Realty Inc. (NYSE:CLPR) is the most popular stock in this table. On the other hand RADA Electronic Industries Ltd. (NASDAQ:RADA) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks IDEAYA Biosciences, Inc. (NASDAQ:IDYA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IDYA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on IDYA were disappointed as the stock returned -15% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.