Idera Pharmaceuticals Inc (IDRA): Hedge Funds Are Nibbling On
Abigail Fisher
6 min read
In this article we will check out the progression of hedge fund sentiment towards Idera Pharmaceuticals Inc (NASDAQ:IDRA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Idera Pharmaceuticals Inc (NASDAQ:IDRA) investors should be aware of an increase in enthusiasm from smart money of late. IDRA was in 8 hedge funds' portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with IDRA positions at the end of the previous quarter. Our calculations also showed that IDRA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to take a look at the latest hedge fund action surrounding Idera Pharmaceuticals Inc (NASDAQ:IDRA).
What have hedge funds been doing with Idera Pharmaceuticals Inc (NASDAQ:IDRA)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in IDRA over the last 18 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Baker Bros. Advisors, managed by Julian Baker and Felix Baker, holds the biggest position in Idera Pharmaceuticals Inc (NASDAQ:IDRA). Baker Bros. Advisors has a $6.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Baker Bros. Advisors's heels of Renaissance Technologies, with a $0.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions include Israel Englander's Millennium Management, William Leland Edwards's Palo Alto Investors and Chuck Royce's Royce & Associates. In terms of the portfolio weights assigned to each position Baker Bros. Advisors allocated the biggest weight to Idera Pharmaceuticals Inc (NASDAQ:IDRA), around 0.04% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to IDRA.
Consequently, some big names were leading the bulls' herd. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, assembled the most outsized position in Idera Pharmaceuticals Inc (NASDAQ:IDRA). Algert Coldiron Investors had $0 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0 million position during the quarter.
Let's also examine hedge fund activity in other stocks similar to Idera Pharmaceuticals Inc (NASDAQ:IDRA). These stocks are GNC Holdings Inc (NYSE:GNC), Manhattan Bridge Capital, Inc (NASDAQ:LOAN), AudioEye, Inc. (NASDAQ:AEYE), and AMREP Corporation (NYSE:AXR). This group of stocks' market valuations resemble IDRA's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GNC,7,1655,-8 LOAN,1,824,0 AEYE,2,170,0 AXR,2,1083,0 Average,3,933,-2 [/table]
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $8 million in IDRA's case. GNC Holdings Inc (NYSE:GNC) is the most popular stock in this table. On the other hand Manhattan Bridge Capital, Inc (NASDAQ:LOAN) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Idera Pharmaceuticals Inc (NASDAQ:IDRA) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on IDRA as the stock returned 40.9% so far in Q2 (through June 17th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
