Hedge Funds Still Buying Mirati Therapeutics, Inc. (MRTX)

·6 min read

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Mirati Therapeutics, Inc. (NASDAQ:MRTX).

Mirati Therapeutics, Inc. (NASDAQ:MRTX) investors should be aware of an increase in support from the world's most elite money managers lately. Mirati Therapeutics, Inc. (NASDAQ:MRTX) was in 57 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 56 hedge funds in our database with MRTX holdings at the end of December. Our calculations also showed that MRTX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

If you'd ask most stock holders, hedge funds are seen as slow, outdated investment tools of the past. While there are greater than 8000 funds trading at present, We hone in on the upper echelon of this club, approximately 850 funds. These hedge fund managers preside over bulk of all hedge funds' total capital, and by watching their matchless picks, Insider Monkey has determined a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. 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

Joseph Edelman of Perceptive Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $29 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 analyze the fresh hedge fund action encompassing Mirati Therapeutics, Inc. (NASDAQ:MRTX).

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

At the end of the first quarter, a total of 57 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in MRTX 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.

Among these funds, Avoro Capital Advisors (venBio Select Advisor) held the most valuable stake in Mirati Therapeutics, Inc. (NASDAQ:MRTX), which was worth $800.8 million at the end of the fourth quarter. On the second spot was Perceptive Advisors which amassed $595.2 million worth of shares. Baker Bros. Advisors, OrbiMed Advisors, and Farallon 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 Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to Mirati Therapeutics, Inc. (NASDAQ:MRTX), around 13.83% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, setting aside 7.52 percent of its 13F equity portfolio to MRTX.

Consequently, specific money managers were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, assembled the most outsized call position in Mirati Therapeutics, Inc. (NASDAQ:MRTX). Holocene Advisors had $41.1 million invested in the company at the end of the quarter. Jeffrey Jay and David Kroin's Great Point Partners also made a $23.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Stephen DuBois's Camber Capital Management, Frank Fu's CaaS Capital, and Doug Silverman and Alexander Klabin's Senator Investment Group.

Let's now review hedge fund activity in other stocks similar to Mirati Therapeutics, Inc. (NASDAQ:MRTX). We will take a look at Carlisle Companies, Inc. (NYSE:CSL), Service Corporation International (NYSE:SCI), GSX Techedu Inc. (NYSE:GSX), Alaska Air Group, Inc. (NYSE:ALK), Assurant, Inc. (NYSE:AIZ), Reinsurance Group of America Inc (NYSE:RGA), and UGI Corp (NYSE:UGI). This group of stocks' market valuations are similar to MRTX's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CSL,18,186375,1 SCI,23,709728,-5 GSX,30,277849,13 ALK,32,587935,-3 AIZ,27,1029086,0 RGA,27,355245,8 UGI,19,189152,-6 Average,25.1,476481,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $476 million. That figure was $2867 million in MRTX's case. Alaska Air Group, Inc. (NYSE:ALK) is the most popular stock in this table. On the other hand Carlisle Companies, Inc. (NYSE:CSL) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Mirati Therapeutics, Inc. (NASDAQ:MRTX) is more popular among hedge funds. Our overall hedge fund sentiment score for MRTX is 86. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately MRTX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MRTX were disappointed as the stock returned 0.4% since the end of the first quarter (through 6/11) 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.

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