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. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL).
Is ZNTL stock a buy? Investors who are in the know were in a bearish mood. The number of long hedge fund bets were trimmed by 1 lately. Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 17. Our calculations also showed that ZNTL isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 17 hedge funds in our database with ZNTL holdings at the end of December.
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.
Mario Gabelli of GAMCO Investors
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 gander at the recent hedge fund action surrounding Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL).
Do Hedge Funds Think ZNTL Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ZNTL over the last 23 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Matrix Capital Management was the largest shareholder of Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL), with a stake worth $165.8 million reported as of the end of March. Trailing Matrix Capital Management was Tybourne Capital Management, which amassed a stake valued at $115.6 million. Viking Global, Redmile Group, and Citadel Investment Group 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 0 allocated the biggest weight to Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL), around 2.54% of its 13F portfolio. 0 is also relatively very bullish on the stock, earmarking 1.91 percent of its 13F equity portfolio to ZNTL.
Due to the fact that Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) has witnessed falling interest from hedge fund managers, it's safe to say that there exists a select few hedge funds who sold off their full holdings heading into Q2. At the top of the heap, Joseph Edelman's Perceptive Advisors dumped the largest position of the 750 funds tracked by Insider Monkey, totaling an estimated $54.5 million in stock. Frank Fu's fund, CaaS Capital, also cut its stock, about $6.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q2.
Let's now take a look at hedge fund activity in other stocks similar to Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL). We will take a look at Lions Gate Entertainment Corporation (NYSE:LGF-B), Primoris Services Corp (NASDAQ:PRIM), Callon Petroleum Company (NYSE:CPE), BrightView Holdings, Inc. (NYSE:BV), Pandion Therapeutics Inc. (NASDAQ:PAND), AMTD International Inc. (NYSE:HKIB), and Kronos Worldwide, Inc. (NYSE:KRO). This group of stocks' market values match ZNTL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LGF-B,27,356880,4 PRIM,28,163697,11 CPE,16,94442,9 BV,11,219755,0 PAND,14,166657,4 HKIB,2,8546,1 KRO,9,31288,1 Average,15.3,148752,4.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.3 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $580 million in ZNTL's case. Primoris Services Corp (NASDAQ:PRIM) is the most popular stock in this table. On the other hand AMTD International Inc. (NYSE:HKIB) is the least popular one with only 2 bullish hedge fund positions. Zentalis Pharmaceuticals, Inc. (NASDAQ:ZNTL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZNTL is 59.2. 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. Hedge funds were also right about betting on ZNTL, though not to the same extent, as the stock returned 17.5% since Q1 (through July 23rd) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.