How do you choose the next stock to invest in? One way would be to spend days searching for thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are overall bullish on. Hedge funds and other institutional investors typically invest a lot of capital and need to do due diligence when choosing their next choice. They don’t always get it right, but on average, their stock picks have produced historically high returns after taking known risk factors into account. With that in mind, let’s take a look at recent hedge fund activity around BridgeBio Pharma, Inc. (NASDAQ:BBIO).
Is BBIO Stock a Buy? BridgeBio Pharma, Inc. (NASDAQ:BBIO) has seen a surge in interest in hedge funds recently. BridgeBio Pharma, Inc. (NASDAQ:BBIO) was in 23 hedge fund portfolios at the end of the fourth quarter of 2020. The all-time high for this statistic was previously 14. This means the bullish number of hedge fund positions in this stock is currently at its all-time high. Our calculations have also shown that BBIO is not one of them 30 Most Popular Stocks Among Hedge Funds (Click here for the Q4 ranking).
In the 21st century investor toolkit, stock market investors have numerous metrics at their disposal to assess listed companies. A couple of the lesser-known metrics are hedge fund and insider trading signals. Our experts have shown that those who follow the top hedge fund managers can outperform the S&P 500 by an excellent amount in the past (Details can be found here). The portfolio of our monthly newsletter with long stock picks has also achieved a return of 197% since March 2017 (until March 2021) and outperformed the S&P 500 index by 124 percentage points. You can download a sample copy of this newsletter on our website .
Andreas Halvorsen from Viking Global
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Do Hedge Funds Think BBIO is a Good Stock to Buy Now?
At the end of the fourth quarter, a total of 23 hedge funds tracked by Insider Monkey were long in this stock, a change of 77% from the previous quarter. The following graph shows the number of hedge funds with a bullish position in BBIO over the past 22 quarters. So let’s find out which hedge funds were among the top owners of the stock, and which hedge funds were making big strides.
More accurate, Viking Global was the largest shareholder in BridgeBio Pharma, Inc. (NASDAQ: BBIO), with a stake of $ 1,893 million reported in late December. Behind Viking Global were Perceptive Advisors, who amassed a stake of $ 476.9 million. Hillhouse Capital Management, Cormorant Asset Management and Darwin Global Management were also very fond of the stock and became one of the company’s largest hedge fund owners. In relation to the portfolio weights assigned to each position Darwin Global Management BridgeBio Pharma, Inc. (NASDAQ: BBIO) received the largest weight, approximately 13.15% of its 13F portfolio. Viking Global is also relatively bullish on the stock, contributing 5.21 percent of its 13F stock portfolio to BBIO.
With a general upward trend among the heavyweights, some big names were making their own way. Darwin Global Management, managed by Abhishek Trehan, has built the largest position in BridgeBio Pharma, Inc. (NASDAQ: BBIO). Darwin Global Management had invested $ 47.1 million in the company as of the end of the quarter. David Cohen and Harold Levy Iridian Asset Management also initiated a $ 38.7 million position in the quarter. The other funds with brand new BBIO positions are Doron Breen and Mori Arkin’s Sphera Global Healthcare FundThe two Sigma consultants from John Overdeck and David Siegel and the DSAM partners from Guy Shahar.
Let’s look at hedge fund activity in other stocks similar to BridgeBio Pharma, Inc. (NASDAQ: BBIO). We take a look at The Mosaic Company (NYSE:MOS), Aluminum Corp. by China Limited (NYSE:OH), The New York Times Company (NYSE:NYT), Tapestry, Inc. (NYSE:TPR), Globant SA (NYSE:GLOB), Alleghany Corporation (NYSE:Y.) and Dada Nexus Limited (NASDAQ:DADA). The market capitalization of this group of stocks is similar to the market capitalization of BBIO.
[table] Ticker, number of HRs with positions, total value of HR positions (x1000), change in HR position MOS, 39.841121.8 ACH, 4.7199.0 NYT, 50.2749728.5 TPR, 49.1295430.10 GLOB 15.279923, -6 Y , 34.364699.5 DADA, 25.168093.8 Average, 30.9.815170.4.3 [/table]
View table here When formatting problems occur.
As you can see, these stocks had an average of 30.9 hedge funds with bullish positions and the average amount invested in these stocks was $ 815 million. That figure was $ 3,029 million in the case of BBIO. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand, Aluminum Corp. by China Limited (NYSE:OH) is the least popular with only 4 bullish hedge fund positions. BridgeBio Pharma, Inc. (NASDAQ: BBIO) isn’t the least popular stock in this group, but interest in hedge funds is still below average. Our overall hedge fund sentiment for BBIO is 60.7. Stocks with a higher number of hedge fund positions relative to other stocks and relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we prefer to spend our time researching stocks that hedge funds are piling up on. Our calculations have shown that Top 30 most popular stocks Hedge funds returned 81.2% in 2019 and 2020, outperforming the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% through April 19, 2021, again outperforming the market by 0.9 percentage points. Unfortunately, BBIO was nowhere near as popular as these 30 stocks (the sentiment among hedge funds was pretty bearish); BBIO investors were disappointed when the stock returned -21.9% since late December (through April 19th) and underperformed the market. If you’re interested in investing in large-cap stocks with big upside potential, this is what you should check out Top 30 most popular stocks among hedge funds, as most of these stocks outperformed the market as early as 2020.
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Disclosure: None. This article was originally published at Insider monkey.