Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in ImmunityBio, Inc. (NASDAQ:IBRX)? The smart money sentiment can provide an answer to this question.
Is ImmunityBio, Inc. (NASDAQ:IBRX) worth your attention right now? Money managers were turning bullish. The number of bullish hedge fund positions increased by 3 in recent months. ImmunityBio, Inc. (NASDAQ:IBRX) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 10. Our calculations also showed that IBRX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind let’s view the fresh hedge fund action encompassing ImmunityBio, Inc. (NASDAQ:IBRX).
Do Hedge Funds Think IBRX Is A Good Stock To Buy Now?
At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the fourth quarter of 2020. By comparison, 4 hedge funds held shares or bullish call options in IBRX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, OZ Management was the largest shareholder of ImmunityBio, Inc. (NASDAQ:IBRX), with a stake worth $3.8 million reported as of the end of March. Trailing OZ Management was Citadel Investment Group, which amassed a stake valued at $2.5 million. Millennium Management, Millennium Management, and ExodusPoint Capital 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 TwinBeech Capital allocated the biggest weight to ImmunityBio, Inc. (NASDAQ:IBRX), around 0.1% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to IBRX.
As industrywide interest jumped, some big names have jumped into ImmunityBio, Inc. (NASDAQ:IBRX) headfirst. OZ Management, managed by Daniel S. Och, assembled the biggest position in ImmunityBio, Inc. (NASDAQ:IBRX). OZ Management had $3.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $2.5 million investment in the stock during the quarter. The following funds were also among the new IBRX investors: Israel Englander’s Millennium Management, Israel Englander’s Millennium Management, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ImmunityBio, Inc. (NASDAQ:IBRX) but similarly valued. These stocks are Axon Enterprise, Inc. (NASDAQ:AXON), Sasol Limited (NYSE:SSL), Kirkland Lake Gold Ltd. (NYSE:KL), AGNC Investment Corp. (NASDAQ:AGNC), Ralph Lauren Corporation (NYSE:RL), Nielsen Holdings plc (NYSE:NLSN), and Zions Bancorporation, National Association (NASDAQ:ZION). This group of stocks’ market valuations resemble IBRX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AXON | 31 | 410366 | -1 |
| SSL | 7 | 63240 | -3 |
| KL | 25 | 401139 | 1 |
| AGNC | 18 | 167634 | -7 |
| RL | 34 | 955242 | -1 |
| NLSN | 34 | 1981675 | 0 |
| ZION | 24 | 193865 | -4 |
| Average | 24.7 | 596166 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.7 hedge funds with bullish positions and the average amount invested in these stocks was $596 million. That figure was $8 million in IBRX’s case. Ralph Lauren Corporation (NYSE:RL) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks ImmunityBio, Inc. (NASDAQ:IBRX) is even less popular than SSL. Our overall hedge fund sentiment score for IBRX is 26. 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. Hedge funds dodged a bullet by taking a bearish stance towards IBRX. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th but managed to beat the market again by 4.8 percentage points. Unfortunately IBRX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); IBRX investors were disappointed as the stock returned -39.1% since the end of the first quarter (through 6/25) 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.
Follow Immunitybio Inc. (NASDAQ:IBRX)
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Disclosure: None. This article was originally published at Insider Monkey.