Do Hedge Funds Love BioCryst Pharmaceuticals, Inc. (BCRX)?

·6 min read

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX).

Is BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) going to take off soon? Prominent investors were turning bullish. The number of bullish hedge fund positions rose by 3 lately. BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) was in 25 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 26. Our calculations also showed that BCRX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 22 hedge funds in our database with BCRX positions at the end of the first quarter.

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Felix Baker - Baker Bros.
Felix Baker - Baker Bros.

Felix Baker of Baker Bros.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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. Now we're going to go over the new hedge fund action encompassing BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX).

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

At the end of June, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BCRX over the last 24 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Among these funds, Baker Bros. Advisors held the most valuable stake in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), which was worth $201 million at the end of the second quarter. On the second spot was Sarissa Capital Management which amassed $67.4 million worth of shares. Healthcor Management LP, Deerfield Management, and Fisher Asset Management 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 Burrage Capital Management allocated the biggest weight to BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), around 13.71% of its 13F portfolio. Sarissa Capital Management is also relatively very bullish on the stock, setting aside 5.36 percent of its 13F equity portfolio to BCRX.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Fisher Asset Management, managed by Ken Fisher, assembled the largest position in BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX). Fisher Asset Management had $31.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $11.3 million position during the quarter. The other funds with brand new BCRX positions are Christopher James's Partner Fund Management, Michael Gelband's ExodusPoint Capital, and Joel Greenblatt's Gotham Asset Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) but similarly valued. These stocks are Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT), Group 1 Automotive, Inc. (NYSE:GPI), Main Street Capital Corporation (NYSE:MAIN), Embraer SA (NYSE:ERJ), CVB Financial Corp. (NASDAQ:CVBF), PriceSmart, Inc. (NASDAQ:PSMT), and Kennedy-Wilson Holdings Inc (NYSE:KW). This group of stocks' market valuations resemble BCRX's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RCKT,19,539196,-3 GPI,21,303598,-5 MAIN,8,18777,-2 ERJ,11,114145,-3 CVBF,13,32232,0 PSMT,11,26109,1 KW,18,487526,2 Average,14.4,217369,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $511 million in BCRX's case. Group 1 Automotive, Inc. (NYSE:GPI) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX) is more popular among hedge funds. Our overall hedge fund sentiment score for BCRX is 86.8. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately BCRX wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BCRX were disappointed as the stock returned -7% since the end of the second quarter (through 10/22) 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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