Do Hedge Funds Love Iovance Biotherapeutics, Inc. (IOVA)?

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) makes for a good investment right now.

Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) was in 30 hedge funds’ portfolios at the end of June. The all time high for this statistic is 43. IOVA shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. There were 37 hedge funds in our database with IOVA holdings at the end of March. Our calculations also showed that IOVA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Cathie Wood of ARK Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 we’re going to take a look at the key hedge fund action surrounding Iovance Biotherapeutics, Inc. (NASDAQ:IOVA).

Do Hedge Funds Think IOVA Is A Good Stock To Buy Now?

At second quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IOVA over the last 24 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

The largest stake in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) was held by ARK Investment Management, which reported holding $480.1 million worth of stock at the end of June. It was followed by Perceptive Advisors with a $285.2 million position. Other investors bullish on the company included Avoro Capital Advisors (venBio Select Advisor), OrbiMed Advisors, and Farallon Capital. In terms of the portfolio weights assigned to each position Frazier Healthcare Partners allocated the biggest weight to Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), around 5.13% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, designating 4.12 percent of its 13F equity portfolio to IOVA.

Seeing as Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers that elected to cut their positions entirely in the second quarter. It’s worth mentioning that Jeffrey Jay and David Kroin’s Great Point Partners cut the biggest position of all the hedgies monitored by Insider Monkey, worth about $29.4 million in stock. Mitchell Blutt’s fund, Consonance Capital Management, also sold off its stock, about $25 million worth. These moves are important to note, as total hedge fund interest was cut by 7 funds in the second quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) but similarly valued. These stocks are First Majestic Silver Corp (NYSE:AG), Enable Midstream Partners LP (NYSE:ENBL), Overstock.com, Inc. (NASDAQ:OSTK), ACV Auctions Inc. (NASDAQ:ACVA), Cohen & Steers, Inc. (NYSE:CNS), Jamf Holding Corp. (NASDAQ:JAMF), and loanDepot, Inc. (NYSE:LDI). This group of stocks’ market caps are similar to IOVA’s market cap.

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As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $401 million. That figure was $1666 million in IOVA’s case. Overstock.com, Inc. (NASDAQ:OSTK) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is more popular among hedge funds. Our overall hedge fund sentiment score for IOVA is 68.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 24.9% in 2021 through October 15th but still managed to beat the market by 4.5 percentage points. Hedge funds were also right about betting on IOVA as the stock returned 2.3% since the end of June (through 10/15) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.