Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Arbutus Biopharma Corp (NASDAQ:ABUS) from the perspective of those elite funds.
Is Arbutus Biopharma Corp (NASDAQ:ABUS) undervalued? Investors who are in the know are in a bearish mood. The number of bullish hedge fund positions went down by 4 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NACCO Industries, Inc. (NYSE:NC), Egalet Corp (NASDAQ:EGLT), and Peapack-Gladstone Financial Corp (NASDAQ:PGC) to gather more data points.
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Now, we’re going to go over the latest action encompassing Arbutus Biopharma Corp (NASDAQ:ABUS).
What does the smart money think about Arbutus Biopharma Corp (NASDAQ:ABUS)?
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Daniel Gold’s QVT Financial has the largest position in Arbutus Biopharma Corp (NASDAQ:ABUS), worth close to $97.5 million, comprising 3.3% of its total 13F portfolio. The second largest stake is held by Falcon Edge Capital, led by Richard Gerson and Navroz D. Udwadia, holding a $15.9 million position; 1.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers with similar optimism consist of Arthur B Cohen and Joseph Healey’s Healthcor Management LP, D E Shaw and Israel Englander’s Millennium Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Arbutus Biopharma Corp (NASDAQ:ABUS) but similarly valued. We will take a look at NACCO Industries, Inc. (NYSE:NC), Egalet Corp (NASDAQ:EGLT), Peapack-Gladstone Financial Corp (NASDAQ:PGC), and Covenant Transportation Group, Inc. (NASDAQ:CVTI). This group of stocks’ market valuations resemble ABUS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NC | 5 | 3422 | -2 |
| EGLT | 10 | 32980 | 7 |
| PGC | 6 | 44635 | -1 |
| CVTI | 19 | 31647 | 7 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $160 million in ABUS’s case. Covenant Transportation Group, Inc. (NASDAQ:CVTI) is the most popular stock in this table. On the other hand NACCO Industries, Inc. (NYSE:NC) is the least popular one with only 5 bullish hedge fund positions. Arbutus Biopharma Corp (NASDAQ:ABUS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CVTI might be a better candidate to consider a long position.