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Were Hedge Funds Right About TCR2 Therapeutics Inc. (TCRR)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on TCR2 Therapeutics Inc. (NASDAQ:TCRR).

TCR2 Therapeutics Inc. (NASDAQ:TCRR) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 16 hedge funds' portfolios at the end of the first quarter of 2021. Our calculations also showed that TCRR isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare TCRR to other stocks including The Container Store Group Inc (NYSE:TCS), OraSure Technologies, Inc. (NASDAQ:OSUR), and Knoll Inc (NYSE:KNL) to get a better sense of its popularity.

At the moment there are a lot of methods shareholders use to assess stocks. Some of the most under-the-radar methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top investment managers can outperform the broader indices by a solid margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Joseph Edelman of Perceptive Advisors
Joseph Edelman of Perceptive Advisors

Perceptive Advisors of Joseph Edelman

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Keeping this in mind we're going to check out the key hedge fund action encompassing TCR2 Therapeutics Inc. (NASDAQ:TCRR).

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

At the end of March, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in TCRR a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

The largest stake in TCR2 Therapeutics Inc. (NASDAQ:TCRR) was held by Redmile Group, which reported holding $79.7 million worth of stock at the end of December. It was followed by Cormorant Asset Management with a $19.9 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace LLP, and Perceptive Advisors. In terms of the portfolio weights assigned to each position SilverArc Capital allocated the biggest weight to TCR2 Therapeutics Inc. (NASDAQ:TCRR), around 1.87% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, dishing out 1.12 percent of its 13F equity portfolio to TCRR.

Because TCR2 Therapeutics Inc. (NASDAQ:TCRR) has experienced declining sentiment from the entirety of the hedge funds we track, it's easy to see that there is a sect of money managers who were dropping their entire stakes in the first quarter. At the top of the heap, Mitchell Blutt's Consonance Capital Management sold off the biggest stake of the "upper crust" of funds watched by Insider Monkey, valued at close to $71.3 million in stock. Christopher James's fund, Partner Fund Management, also cut its stock, about $24 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as TCR2 Therapeutics Inc. (NASDAQ:TCRR) but similarly valued. We will take a look at The Container Store Group Inc (NYSE:TCS), OraSure Technologies, Inc. (NASDAQ:OSUR), Knoll Inc (NYSE:KNL), PAE Incorporated (NASDAQ:PAE), Banco Macro SA (NYSE:BMA), Univest Financial Corporation (NASDAQ:UVSP), and Aerie Pharmaceuticals Inc (NASDAQ:AERI). This group of stocks' market caps are similar to TCRR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TCS,18,362198,-2 OSUR,13,62117,-2 KNL,10,12787,3 PAE,19,101479,3 BMA,8,30485,1 UVSP,9,94462,-2 AERI,21,158479,4 Average,14,117430,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $117 million. That figure was $166 million in TCRR's case. Aerie Pharmaceuticals Inc (NASDAQ:AERI) is the most popular stock in this table. On the other hand Banco Macro SA (NYSE:BMA) is the least popular one with only 8 bullish hedge fund positions. TCR2 Therapeutics Inc. (NASDAQ:TCRR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TCRR is 65.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately TCRR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TCRR were disappointed as the stock returned -40.4% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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