When billionaire investors step into a particular smaller-cap under-the-radar name, investors take notice. That appears to be the case with Fate Therapeutics (NASDAQ:FATE) today. At the time of writing, FATE stock has soared more than 17% on news that Steve Cohen and his Point 72 hedge fund have taken a 5% passive stake in the biotech company.
Fate Therapeutics is working on developing drugs and treatments for patients with various cancers and autoimmune diseases. The early-stage oncology and immune biotech player actually has a rather impressive pipeline of prospective drugs, with five currently in Phase 1 trials. Thus, as far as speculative biotech stocks are concerned, this company certainly has enough going on to entice many investors, particularly given the high-value markets it is pursuing.
Now, Fate is not a micro-cap stock by any means. After today’s rally, the company’s market capitalization has surged above the $500 million mark. Accordingly, Fate is starting to garner attention from biotech investors, particularly those who want to know what Cohen does with the company.
Let’s dive into what was reported and why Fate is seeing its stock price surge today.
FATE Stock Soars on News of Cohen Stake
Steve Cohen’s 5% stake in Fate Therapeutics amounts to 4.73 million shares of the stock. As per a filing released late last week for a transaction date of Jan. 24, this is among the billionaire’s most recent moves and represents a significant position in the company.
Now, a stake of around $25 million in any company isn’t going to make or break this hedge fund. That’s a significant chunk of Fate Therapeutics’ overall share count, but it also doesn’t represent a stake that will likely allow Point 72 to gain board seats or engage in investor activism. Currently, it appears this stake is passive, so that’s not necessarily something investors appear to be banking on today.
That said, hedge funds are all in the business of making money and finding undervalued securities. This notable position size suggests Cohen and his team believe that Fate could have significant value that the market doesn’t appreciate.
Honestly, this is not a stock I’ve followed until this announcement. It’s now on my watch list, and I’ll provide pertinent updates on this stock as they arise. At least for today, it appears FATE stock has some serious momentum, so it will be interesting to see if this trend can continue (the stock has now more than tripled off its late-2023 lows).
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
