Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved, lost a third of its value since the end of July. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2018 yielded an average return of 6.7% year-to-date, vs. a gain of 2.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of ProQR Therapeutics NV (NASDAQ:PRQR).
Is ProQR Therapeutics NV (NASDAQ:PRQR) a buy right now? Investors who are in the know are getting more bullish. The number of bullish hedge fund bets inched up by 4 recently. Our calculations also showed that prqr isn't among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the recent hedge fund action surrounding ProQR Therapeutics NV (NASDAQ:PRQR).
Hedge fund activity in ProQR Therapeutics NV (NASDAQ:PRQR)
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in PRQR at the beginning of this year. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in ProQR Therapeutics NV (NASDAQ:PRQR) was held by Adage Capital Management, which reported holding $67 million worth of stock at the end of September. It was followed by OrbiMed Advisors with a $39.4 million position. Other investors bullish on the company included Redmile Group, Perceptive Advisors, and DAFNA Capital Management.
Consequently, key hedge funds were breaking ground themselves. Redmile Group, managed by Jeremy Green, created the most outsized position in ProQR Therapeutics NV (NASDAQ:PRQR). Redmile Group had $28.1 million invested in the company at the end of the quarter. Joseph Edelman's Perceptive Advisors also initiated a $14.7 million position during the quarter. The following funds were also among the new PRQR investors: Brian Ashford-Russell and Tim Woolley's Polar Capital, D. E. Shaw's D E Shaw, and Ori Hershkovitz's Nexthera Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as ProQR Therapeutics NV (NASDAQ:PRQR) but similarly valued. These stocks are RYB Education, Inc. (NYSE:RYB), Sabine Royalty Trust (NYSE:SBR), Western Asst High Incm Opprtnty Fnd Inc. (NYSE:HIO), and First Defiance Financial Corp. (NASDAQ:FDEF). This group of stocks' market values are closest to PRQR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RYB,4,70232,0 SBR,7,22145,-1 HIO,2,51918,-2 FDEF,8,38726,1 Average,5.25,45755,-0.5 [/table]
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As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $163 million in PRQR's case. First Defiance Financial Corp. (NASDAQ:FDEF) is the most popular stock in this table. On the other hand Western Asst High Incm Opprtnty Fnd Inc. (NYSE:HIO) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks ProQR Therapeutics NV (NASDAQ:PRQR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.