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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded BioDelivery Sciences International, Inc. (NASDAQ:BDSI) and determine whether the smart money was really smart about this stock.
Is BioDelivery Sciences International, Inc. (NASDAQ:BDSI) a cheap investment now? Investors who are in the know were becoming less hopeful. The number of bullish hedge fund bets went down by 1 recently. BioDelivery Sciences International, Inc. (NASDAQ:BDSI) was in 26 hedge funds’ portfolios at the end of June. The all time high for this statistics is 27. Our calculations also showed that BDSI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 27 hedge funds in our database with BDSI holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are assumed to be unimportant, old financial tools of the past. While there are more than 8000 funds trading at the moment, We look at the moguls of this group, approximately 850 funds. These money managers control the majority of all hedge funds’ total capital, and by following their highest performing picks, Insider Monkey has found a few investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Wil Harkey of Nantahala Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to take a glance at the new hedge fund action encompassing BioDelivery Sciences International, Inc. (NASDAQ:BDSI).
What have hedge funds been doing with BioDelivery Sciences International, Inc. (NASDAQ:BDSI)?
At the end of June, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in BDSI over the last 20 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Deerfield Management, managed by James E. Flynn, holds the biggest position in BioDelivery Sciences International, Inc. (NASDAQ:BDSI). Deerfield Management has a $28.5 million position in the stock, comprising 0.8% of its 13F portfolio. Sitting at the No. 2 spot is Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, which holds a $21.8 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism consist of David Rosen’s Rubric Capital Management, Behzad Aghazadeh’s Avoro Capital Advisors (venBio Select Advisor) and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Rubric Capital Management allocated the biggest weight to BioDelivery Sciences International, Inc. (NASDAQ:BDSI), around 2.01% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, setting aside 1.2 percent of its 13F equity portfolio to BDSI.
Due to the fact that BioDelivery Sciences International, Inc. (NASDAQ:BDSI) has witnessed a decline in interest from the smart money, it’s safe to say that there is a sect of hedge funds that decided to sell off their positions entirely in the second quarter. It’s worth mentioning that Julian Baker and Felix Baker’s Baker Bros. Advisors dropped the biggest investment of the 750 funds followed by Insider Monkey, valued at an estimated $6.2 million in stock, and Timothy P. Lynch’s Stonepine Capital was right behind this move, as the fund dumped about $2.9 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to BioDelivery Sciences International, Inc. (NASDAQ:BDSI). We will take a look at Establishment Labs Holdings Inc. (NASDAQ:ESTA), Boston Omaha Corporation (NASDAQ:BOMN), NeoPhotonics Corp (NYSE:NPTN), Century Bancorp, Inc. (NASDAQ:CNBKA), Teekay Tankers Ltd. (NYSE:TNK), Precision BioSciences, Inc. (NASDAQ:DTIL), and XPEL Inc. (NASDAQ:XPEL). All of these stocks’ market caps match BDSI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESTA | 11 | 78982 | -3 |
| BOMN | 12 | 171784 | 7 |
| NPTN | 23 | 75501 | -1 |
| CNBKA | 3 | 17275 | -1 |
| TNK | 17 | 29045 | -4 |
| DTIL | 12 | 15431 | 1 |
| XPEL | 4 | 10056 | -5 |
| Average | 11.7 | 56868 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.7 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $112 million in BDSI’s case. NeoPhotonics Corp (NYSE:NPTN) is the most popular stock in this table. On the other hand Century Bancorp, Inc. (NASDAQ:CNBKA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks BioDelivery Sciences International, Inc. (NASDAQ:BDSI) is more popular among hedge funds. Our overall hedge fund sentiment score for BDSI is 82.9. 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 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 gained 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately BDSI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on BDSI were disappointed as the stock returned -13.5% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
