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Is NKTR A Good Stock To Buy Now According To Hedge Funds?

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We at Insider Monkey have gone over 817 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 Nektar Therapeutics (NASDAQ:NKTR) based on that data.

Is NKTR a good stock to buy now? Nektar Therapeutics (NASDAQ:NKTR) has seen a decrease in support from the world's most elite money managers recently. Nektar Therapeutics (NASDAQ:NKTR) was in 21 hedge funds' portfolios at the end of September. The all time high for this statistic is 27. There were 26 hedge funds in our database with NKTR positions at the end of the second quarter. Our calculations also showed that NKTR isn't among the 30 most popular stocks among hedge funds (click for Q3 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 eyes of most traders, hedge funds are viewed as worthless, old financial tools of years past. While there are greater than 8000 funds in operation at present, Our experts hone in on the crème de la crème of this club, about 850 funds. These money managers direct the lion's share of all hedge funds' total capital, and by tailing their finest investments, Insider Monkey has brought to light a number of investment strategies that have historically surpassed the market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Henrik Rhenman of Rhenman & Partners Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to go over the latest hedge fund action surrounding Nektar Therapeutics (NASDAQ:NKTR).

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

At Q3's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards NKTR over the last 21 quarters. 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, Maverick Capital was the largest shareholder of Nektar Therapeutics (NASDAQ:NKTR), with a stake worth $94.2 million reported as of the end of September. Trailing Maverick Capital was Camber Capital Management, which amassed a stake valued at $41.5 million. Rhenman & Partners Asset Management, D E Shaw, and Osterweis 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 Camber Capital Management allocated the biggest weight to Nektar Therapeutics (NASDAQ:NKTR), around 2.19% of its 13F portfolio. Maverick Capital is also relatively very bullish on the stock, earmarking 1.75 percent of its 13F equity portfolio to NKTR.

Judging by the fact that Nektar Therapeutics (NASDAQ:NKTR) has faced a decline in interest from hedge fund managers, it's safe to say that there is a sect of funds that elected to cut their full holdings heading into Q4. Interestingly, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors cut the biggest investment of the "upper crust" of funds watched by Insider Monkey, totaling close to $1.2 million in stock. Jerome Pfund and Michael Sjostrom's fund, Sectoral Asset Management, also cut its stock, about $0.6 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds heading into Q4.

Let's also examine hedge fund activity in other stocks similar to Nektar Therapeutics (NASDAQ:NKTR). These stocks are Open Lending Corporation (NASDAQ:LPRO), Dorman Products Inc. (NASDAQ:DORM), Diodes Incorporated (NASDAQ:DIOD), Companhia Energética de Minas Gerais (NYSE:CIG), Kohl's Corporation (NYSE:KSS), John Bean Technologies Corporation (NYSE:JBT), and Community Bank System, Inc. (NYSE:CBU). This group of stocks' market values match NKTR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPRO,23,394732,3 DORM,19,73961,0 DIOD,13,109463,-1 CIG,9,9794,0 KSS,38,451191,-4 JBT,21,99713,5 CBU,10,16857,-5 Average,19,165102,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $189 million in NKTR's case. Kohl's Corporation (NYSE:KSS) is the most popular stock in this table. On the other hand Companhia Energética de Minas Gerais (NYSE:CIG) is the least popular one with only 9 bullish hedge fund positions. Nektar Therapeutics (NASDAQ:NKTR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NKTR is 44. 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. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately NKTR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NKTR were disappointed as the stock returned 6.3% since the end of September (through 12/14) 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 many of these stocks already outperformed the market so far this year.

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

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