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 Inmune Bio Inc. (NASDAQ:INMB)? The smart money sentiment can provide an answer to this question.
Is Inmune Bio Inc. (NASDAQ:INMB) a buy here? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions increased by 3 in recent months. Inmune Bio Inc. (NASDAQ:INMB) was in 3 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 1. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that INMB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 0 hedge funds in our database with INMB positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Steven Cohen of Point72 Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. Keeping this in mind let’s take a glance at the fresh hedge fund action regarding Inmune Bio Inc. (NASDAQ:INMB).
How are hedge funds trading Inmune Bio Inc. (NASDAQ:INMB)?
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3 from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INMB over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Granite Point Capital held the most valuable stake in Inmune Bio Inc. (NASDAQ:INMB), which was worth $2.6 million at the end of the third quarter. On the second spot was Point72 Asset Management which amassed $1 million worth of shares. Renaissance Technologies was 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 Granite Point Capital allocated the biggest weight to Inmune Bio Inc. (NASDAQ:INMB), around 0.14% of its 13F portfolio. Point72 Asset Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to INMB.
As aggregate interest increased, some big names were leading the bulls’ herd. Granite Point Capital, managed by Warren Lammert, established the most outsized position in Inmune Bio Inc. (NASDAQ:INMB). Granite Point Capital had $2.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1 million position during the quarter. The only other fund with a brand new INMB position is Renaissance Technologies.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Inmune Bio Inc. (NASDAQ:INMB) but similarly valued. We will take a look at Aytu BioScience, Inc. (NASDAQ:AYTU), Orrstown Financial Services, Inc. (NASDAQ:ORRF), Harrow Health, Inc. (NASDAQ:HROW), Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI), Postal Realty Trust, Inc. (NYSE:PSTL), GTY Technology Holdings, Inc. (NASDAQ:GTYH), and AudioEye, Inc. (NASDAQ:AEYE). This group of stocks’ market caps are closest to INMB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AYTU | 3 | 80 | -1 |
| ORRF | 3 | 3712 | -1 |
| HROW | 15 | 33472 | 5 |
| RMBI | 5 | 3727 | 0 |
| PSTL | 7 | 27122 | 1 |
| GTYH | 6 | 8929 | 2 |
| AEYE | 6 | 15874 | 4 |
| Average | 6.4 | 13274 | 1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $4 million in INMB’s case. Harrow Health, Inc. (NASDAQ:HROW) is the most popular stock in this table. On the other hand Aytu BioScience, Inc. (NASDAQ:AYTU) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Inmune Bio Inc. (NASDAQ:INMB) is even less popular than AYTU. Our overall hedge fund sentiment score for INMB is 38. 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 INMB. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately INMB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); INMB investors were disappointed as the stock returned -16.8% since the end of the third quarter (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.