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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Intellia Therapeutics, Inc. (NASDAQ:NTLA)? The smart money sentiment can provide an answer to this question.
Is NTLA a good stock to buy now? Money managers were reducing their bets on the stock. The number of long hedge fund positions retreated by 2 in recent months. Intellia Therapeutics, Inc. (NASDAQ:NTLA) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 17. Our calculations also showed that NTLA 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). There were 17 hedge funds in our database with NTLA positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of methods stock market investors can use to size up their holdings. Some of the most underrated methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a very impressive amount (see the details here).
John Overdeck of Two Sigma Advisors
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. Now we're going to take a gander at the new hedge fund action surrounding Intellia Therapeutics, Inc. (NASDAQ:NTLA).
Do Hedge Funds Think NTLA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in NTLA a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Intellia Therapeutics, Inc. (NASDAQ:NTLA), with a stake worth $16.6 million reported as of the end of September. Trailing Citadel Investment Group was Point72 Asset Management, which amassed a stake valued at $13 million. Millennium Management, Two Sigma Advisors, and D E Shaw 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 PDT Partners allocated the biggest weight to Intellia Therapeutics, Inc. (NASDAQ:NTLA), around 0.11% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, setting aside 0.1 percent of its 13F equity portfolio to NTLA.
Seeing as Intellia Therapeutics, Inc. (NASDAQ:NTLA) has witnessed falling interest from hedge fund managers, we can see that there lies a certain "tier" of money managers that decided to sell off their positions entirely heading into Q4. It's worth mentioning that Samuel Isaly's OrbiMed Advisors said goodbye to the largest position of all the hedgies watched by Insider Monkey, comprising about $2.9 million in stock, and Matthew L Pinz's Pinz Capital was right behind this move, as the fund sold off about $1.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Intellia Therapeutics, Inc. (NASDAQ:NTLA) but similarly valued. We will take a look at Sixth Street Specialty Lending Inc (NYSE:TSLX), Bitauto Hldg Ltd (NYSE:BITA), Steelcase Inc. (NYSE:SCS), NuStar Energy L.P. (NYSE:NS), ICF International Inc (NASDAQ:ICFI), EnPro Industries, Inc. (NYSE:NPO), and BEST Inc. (NYSE:BEST). This group of stocks' market caps are similar to NTLA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TSLX,11,75906,1 BITA,16,158755,0 SCS,22,93278,0 NS,4,8446,-1 ICFI,12,32049,1 NPO,18,144888,1 BEST,8,13537,2 Average,13,75266,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $62 million in NTLA's case. Steelcase Inc. (NYSE:SCS) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 4 bullish hedge fund positions. Intellia Therapeutics, Inc. (NASDAQ:NTLA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NTLA is 60. 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 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 still beat the market by 15.8 percentage points. Hedge funds were also right about betting on NTLA as the stock returned 162.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.