Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Molecular Templates, Inc. (NASDAQ:MTEM).
Molecular Templates, Inc. (NASDAQ:MTEM) was in 17 hedge funds' portfolios at the end of March. MTEM has experienced a decrease in activity from the world's largest hedge funds in recent months. There were 20 hedge funds in our database with MTEM holdings at the end of the previous quarter. Our calculations also showed that MTEM 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_673876" align="aligncenter" width="400"] John Overdeck of Two Sigma Advisors[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a look at the key hedge fund action encompassing Molecular Templates, Inc. (NASDAQ:MTEM).
What does smart money think about Molecular Templates, Inc. (NASDAQ:MTEM)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in MTEM a year ago. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Biotechnology Value Fund / BVF Inc was the largest shareholder of Molecular Templates, Inc. (NASDAQ:MTEM), with a stake worth $37.9 million reported as of the end of September. Trailing Biotechnology Value Fund / BVF Inc was Perceptive Advisors, which amassed a stake valued at $32.9 million. Polar Capital, Great Point Partners, and Kingdon 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Molecular Templates, Inc. (NASDAQ:MTEM), around 3.53% of its 13F portfolio. Logos Capital is also relatively very bullish on the stock, designating 2.22 percent of its 13F equity portfolio to MTEM.
Since Molecular Templates, Inc. (NASDAQ:MTEM) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain "tier" of money managers that elected to cut their positions entirely last quarter. Intriguingly, Steve Cohen's Point72 Asset Management cut the largest investment of the 750 funds followed by Insider Monkey, valued at about $3.5 million in stock. Lawrence Hawkins's fund, Prosight Capital, also said goodbye to its stock, about $2.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Molecular Templates, Inc. (NASDAQ:MTEM) but similarly valued. We will take a look at Akero Therapeutics, Inc. (NASDAQ:AKRO), Axcelis Technologies Inc (NASDAQ:ACLS), The RealReal, Inc. (NASDAQ:REAL), and Radius Health Inc (NASDAQ:RDUS). This group of stocks' market values resemble MTEM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AKRO,14,112061,5 ACLS,13,81385,1 REAL,15,79260,2 RDUS,23,111468,1 Average,16.25,96044,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $143 million in MTEM's case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table. On the other hand Axcelis Technologies Inc (NASDAQ:ACLS) is the least popular one with only 13 bullish hedge fund positions. Molecular Templates, Inc. (NASDAQ:MTEM) 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 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 gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately MTEM wasn't nearly as popular as these 10 stocks and hedge funds that were betting on MTEM were disappointed as the stock returned 11.9% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.