How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Bolt Biotherapeutics, Inc. (NASDAQ:BOLT).
Is Bolt Biotherapeutics, Inc. (NASDAQ:BOLT) going to take off soon? The smart money was turning bullish. The number of bullish hedge fund bets rose by 23 lately. Bolt Biotherapeutics, Inc. (NASDAQ:BOLT) was in 23 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that BOLT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are many gauges investors use to value publicly traded companies. Two of the most under-the-radar gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the best fund managers can outpace the broader indices by a significant 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 .
Peter Kolchinsky of RA Capital Management
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Do Hedge Funds Think BOLT Is A Good Stock To Buy Now?
At the end of March, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in BOLT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Vivo Capital, managed by Albert Cha and Frank Kung, holds the number one position in Bolt Biotherapeutics, Inc. (NASDAQ:BOLT). Vivo Capital has a $127.4 million position in the stock, comprising 4.5% of its 13F portfolio. The second most bullish fund manager is RA Capital Management, managed by Peter Kolchinsky, which holds a $78.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism consist of Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Ken Griffin’s Citadel Investment Group and Srini Akkaraju and Michael Dybbs’s Samsara BioCapital. In terms of the portfolio weights assigned to each position Vivo Capital allocated the biggest weight to Bolt Biotherapeutics, Inc. (NASDAQ:BOLT), around 4.48% of its 13F portfolio. Samsara BioCapital is also relatively very bullish on the stock, designating 4.48 percent of its 13F equity portfolio to BOLT.
As industrywide interest jumped, specific money managers have been driving this bullishness. Vivo Capital, managed by Albert Cha and Frank Kung, created the biggest position in Bolt Biotherapeutics, Inc. (NASDAQ:BOLT). Vivo Capital had $127.4 million invested in the company at the end of the quarter. Peter Kolchinsky’s RA Capital Management also made a $78.3 million investment in the stock during the quarter. The other funds with brand new BOLT positions are Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, Ken Griffin’s Citadel Investment Group, and Srini Akkaraju and Michael Dybbs’s Samsara BioCapital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Bolt Biotherapeutics, Inc. (NASDAQ:BOLT) but similarly valued. We will take a look at National Research Corporation (NASDAQ:NRC), Opera Limited (NASDAQ:OPRA), Apollo Medical Holdings, Inc. (NASDAQ:AMEH), WideOpenWest, Inc. (NYSE:WOW), IMAX Corporation (NYSE:IMAX), Kforce Inc. (NASDAQ:KFRC), and Standex International Corp. (NYSE:SXI). This group of stocks’ market values are similar to BOLT’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NRC,9,31401,-3 OPRA,5,7933,2 AMEH,7,16922,1 WOW,14,178652,1 IMAX,22,194008,5 KFRC,13,41766,-3 SXI,7,30113,-3 Average,11,71542,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $423 million in BOLT’s case. IMAX Corporation (NYSE:IMAX) is the most popular stock in this table. On the other hand Opera Limited (NASDAQ:OPRA) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Bolt Biotherapeutics, Inc. (NASDAQ:BOLT) is more popular among hedge funds. Our overall hedge fund sentiment score for BOLT is 90. 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 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 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Unfortunately BOLT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BOLT were disappointed as the stock returned -59.6% since the end of the first quarter (through 7/16) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.