The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Prothena Corporation plc (NASDAQ:PRTA).
Is PRTA a good stock to buy? Prothena Corporation plc (NASDAQ:PRTA) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 25. PRTA has seen a decrease in hedge fund sentiment recently. There were 20 hedge funds in our database with PRTA holdings at the end of December. Our calculations also showed that PRTA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Oleg Nodelman of EcoR1 Capital
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 take a glance at the recent hedge fund action surrounding Prothena Corporation plc (NASDAQ:PRTA).
Do Hedge Funds Think PRTA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in PRTA a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, EcoR1 Capital held the most valuable stake in Prothena Corporation plc (NASDAQ:PRTA), which was worth $277.2 million at the end of the fourth quarter. On the second spot was Redmile Group which amassed $46.7 million worth of shares. Palo Alto Investors, Rock Springs Capital Management, and Prosight Capital 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 Prosight Capital allocated the biggest weight to Prothena Corporation plc (NASDAQ:PRTA), around 12.34% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, designating 12.29 percent of its 13F equity portfolio to PRTA.
Judging by the fact that Prothena Corporation plc (NASDAQ:PRTA) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of money managers that elected to cut their positions entirely by the end of the first quarter. At the top of the heap, OrbiMed Advisors sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising about $21.6 million in stock. Jeffrey Jay and David Kroin’s fund, Great Point Partners, also said goodbye to its stock, about $11.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the first quarter.
Let’s check out hedge fund activity in other stocks similar to Prothena Corporation plc (NASDAQ:PRTA). We will take a look at Trillium Therapeutics Inc. (NASDAQ:TRIL), Omeros Corporation (NASDAQ:OMER), American Axle & Manufacturing Holdings, Inc. (NYSE:AXL), Zumiez Inc. (NASDAQ:ZUMZ), Chase Corporation (NYSE:CCF), Boston Private Financial Hldg Inc (NASDAQ:BPFH), and Tivity Health, Inc. (NASDAQ:TVTY). This group of stocks’ market valuations resemble PRTA’s market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRIL,27,343747,-9 OMER,12,129925,2 AXL,21,66993,1 ZUMZ,20,52649,-1 CCF,9,90070,-2 BPFH,24,182992,7 TVTY,24,381882,4 Average,19.6,178323,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $178 million. That figure was $450 million in PRTA’s case. Trillium Therapeutics Inc. (NASDAQ:TRIL) is the most popular stock in this table. On the other hand Chase Corporation (NYSE:CCF) is the least popular one with only 9 bullish hedge fund positions. Prothena Corporation plc (NASDAQ:PRTA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PRTA is 44.6. 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 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. A small number of hedge funds were also right about betting on PRTA as the stock returned 106.8% since the end of the first quarter (through 7/23) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.