Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Kronos Bio, Inc. (NASDAQ:KRON) in this article.
Is KRON a good stock to buy? The smart money was becoming less confident. The number of bullish hedge fund bets were cut by 3 lately. Kronos Bio, Inc. (NASDAQ:KRON) was in 16 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. Our calculations also showed that KRON isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the 21st century investor’s toolkit there are dozens of formulas stock market investors employ to grade stocks. A couple of the best formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the market 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 .
Andre Perold of HighVista Strategies
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. With all of this in mind we’re going to analyze the key hedge fund action regarding Kronos Bio, Inc. (NASDAQ:KRON).
Do Hedge Funds Think KRON Is A Good Stock To Buy Now?
At first quarter’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the fourth quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in KRON a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Joseph Edelman’s Perceptive Advisors has the most valuable position in Kronos Bio, Inc. (NASDAQ:KRON), worth close to $79.7 million, accounting for 1% of its total 13F portfolio. On Perceptive Advisors’s heels is Leonard A. Potter of Wildcat Capital Management, with a $42.1 million position; 5.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish include Ken Griffin’s Citadel Investment Group, Lei Zhang’s Hillhouse Capital Management and Eli Casdin’s Casdin Capital. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to Kronos Bio, Inc. (NASDAQ:KRON), around 5.14% of its 13F portfolio. Commodore Capital is also relatively very bullish on the stock, setting aside 3.44 percent of its 13F equity portfolio to KRON.
Judging by the fact that Kronos Bio, Inc. (NASDAQ:KRON) has witnessed falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who were dropping their entire stakes in the first quarter. At the top of the heap, Anand Parekh’s Alyeska Investment Group sold off the biggest stake of the 750 funds followed by Insider Monkey, valued at an estimated $3 million in stock, and Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund was right behind this move, as the fund dumped about $1 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds in the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Kronos Bio, Inc. (NASDAQ:KRON) but similarly valued. We will take a look at Acadia Realty Trust (NYSE:AKR), LTC Properties Inc (NYSE:LTC), Global Net Lease, Inc. (NYSE:GNL), Pulmonx Corporation (NASDAQ:LUNG), Kite Realty Group Trust (NYSE:KRG), SiriusPoint Ltd. (NYSE:SPNT), and Gray Television, Inc. (NYSE:GTN). All of these stocks’ market caps are similar to KRON’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AKR,8,22188,-1 LTC,7,6702,-1 GNL,16,38694,9 LUNG,27,246881,5 KRG,11,46978,7 SPNT,14,39043,3 GTN,25,152173,-2 Average,15.4,78951,2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.4 hedge funds with bullish positions and the average amount invested in these stocks was $79 million. That figure was $226 million in KRON’s case. Pulmonx Corporation (NASDAQ:LUNG) is the most popular stock in this table. On the other hand LTC Properties Inc (NYSE:LTC) is the least popular one with only 7 bullish hedge fund positions. Kronos Bio, Inc. (NASDAQ:KRON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KRON is 49.8. 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 KRON wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KRON were disappointed as the stock returned -25.6% 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.