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Is Mirati Therapeutics (MRTX) Stock A Buy or Sell?

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Debasis Saha
·6 min read
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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 887 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 December 31st. In this article we look at what those investors think of Mirati Therapeutics, Inc. (NASDAQ:MRTX).

Is MRTX stock a buy or sell? Prominent investors were turning bullish. The number of bullish hedge fund positions moved up by 18 in recent months. Mirati Therapeutics, Inc. (NASDAQ:MRTX) was in 56 hedge funds' portfolios at the end of December. The all time high for this statistic is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MRTX isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 38 hedge funds in our database with MRTX holdings at the end of September.

At the moment there are a large number of gauges stock market investors have at their disposal to size up stocks. Two of the most innovative gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass their index-focused peers by a superb amount (see the details here).

Felix Baker - Baker Bros.
Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 (or at the end of this article). With all of this in mind let's review the new hedge fund action surrounding Mirati Therapeutics, Inc. (NASDAQ:MRTX).

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

At the end of December, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of 47% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MRTX over the last 22 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Is MRTX A Good Stock To Buy?
Is MRTX A Good Stock To Buy?

Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Mirati Therapeutics, Inc. (NASDAQ:MRTX), which was worth $996.1 million at the end of the fourth quarter. On the second spot was Perceptive Advisors which amassed $811.2 million worth of shares. Baker Bros. Advisors, OrbiMed Advisors, and Farallon Capital 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 Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to Mirati Therapeutics, Inc. (NASDAQ:MRTX), around 17.15% of its 13F portfolio. Darwin Global Management is also relatively very bullish on the stock, earmarking 15.99 percent of its 13F equity portfolio to MRTX.

As industrywide interest jumped, specific money managers have been driving this bullishness. Consonance Capital Management, managed by Mitchell Blutt, initiated the most valuable position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). Consonance Capital Management had $72.5 million invested in the company at the end of the quarter. Abhishek Trehan's Darwin Global Management also initiated a $57.3 million position during the quarter. The other funds with brand new MRTX positions are Steve Cohen's Point72 Asset Management, Renaissance Technologies, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

Let's also examine hedge fund activity in other stocks similar to Mirati Therapeutics, Inc. (NASDAQ:MRTX). These stocks are Bentley Systems, Incorporated (NASDAQ:BSY), Centrais Eletricas Brasileiras SA (NYSE:EBR), CRISPR Therapeutics AG (NASDAQ:CRSP), XPO Logistics Inc (NYSE:XPO), F5 Networks, Inc. (NASDAQ:FFIV), AbCellera Biologics Inc. (NASDAQ:ABCL), and Universal Display Corporation (NASDAQ:OLED). This group of stocks' market caps are similar to MRTX's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BSY,19,82011,0 EBR,6,4239,2 CRSP,34,2010222,8 XPO,40,2981368,1 FFIV,34,1131637,-2 ABCL,25,2316582,25 OLED,24,93963,4 Average,26,1231432,5.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $1231 million. That figure was $3610 million in MRTX's case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras SA (NYSE:EBR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Mirati Therapeutics, Inc. (NASDAQ:MRTX) is more popular among hedge funds. Our overall hedge fund sentiment score for MRTX is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately MRTX wasn't nearly as popular as these 30 stocks and hedge funds that were betting on MRTX were disappointed as the stock returned -18.7% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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