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Were Hedge Funds Right About Corcept Therapeutics Incorporated (CORT)?

Reymerlyn Martin

Hedge funds don't get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don't realize is that 100% of the passive funds didn't see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Corcept Therapeutics Incorporated (NASDAQ:CORT).

Corcept Therapeutics Incorporated (NASDAQ:CORT) has experienced an increase in support from the world's most elite money managers in recent months. CORT was in 21 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 20 hedge funds in our database with CORT holdings at the end of the previous quarter. Our calculations also showed that CORT isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

[caption id="attachment_30600" align="aligncenter" width="400"] Bruce Kovner of Caxton Associates LP[/caption]

Bruce Kovner, Caxton Associates LP

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the "next Amazon" in this video; again we are listening. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's check out the recent hedge fund action surrounding Corcept Therapeutics Incorporated (NASDAQ:CORT).

Hedge fund activity in Corcept Therapeutics Incorporated (NASDAQ:CORT)

At the end of the fourth quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CORT over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Corcept Therapeutics Incorporated (NASDAQ:CORT), with a stake worth $94 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $17.1 million. Citadel Investment Group, Winton Capital Management, and GLG Partners 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 Birchview Capital allocated the biggest weight to Corcept Therapeutics Incorporated (NASDAQ:CORT), around 0.44% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.41 percent of its 13F equity portfolio to CORT.

Consequently, some big names have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most outsized position in Corcept Therapeutics Incorporated (NASDAQ:CORT). Arrowstreet Capital had $17.1 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $0.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Bruce Kovner's Caxton Associates LP and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Corcept Therapeutics Incorporated (NASDAQ:CORT) but similarly valued. These stocks are Kornit Digital Ltd. (NASDAQ:KRNT), Viela Bio, Inc. (NASDAQ:VIE), Vir Biotechnology, Inc. (NASDAQ:VIR), and Viad Corp (NYSE:VVI). All of these stocks' market caps are similar to CORT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KRNT,12,44798,0 VIE,6,207492,6 VIR,2,8818,2 VVI,14,99770,-1 Average,8.5,90220,1.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $156 million in CORT's case. Viad Corp (NYSE:VVI) is the most popular stock in this table. On the other hand Vir Biotechnology, Inc. (NASDAQ:VIR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Corcept Therapeutics Incorporated (NASDAQ:CORT) is more popular among hedge funds. 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 1.3% in 2020 through May 1st but still managed to beat the market by 12.9 percentage points. Hedge funds were also right about betting on CORT, though not to the same extent, as the stock returned 0.8% in 2020 (through May 1st) and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

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

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