Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Marrone Bio Innovations Inc (NASDAQ:MBII) based on that data.
Is Marrone Bio Innovations Inc (NASDAQ:MBII) worth your attention right now? Hedge funds are getting less bullish. The number of long hedge fund bets retreated by 1 lately. Our calculations also showed that MBII isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s go over the recent hedge fund action encompassing Marrone Bio Innovations Inc (NASDAQ:MBII).
How have hedgies been trading Marrone Bio Innovations Inc (NASDAQ:MBII)?
At Q3’s end, a total of 2 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards MBII over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Marrone Bio Innovations Inc (NASDAQ:MBII) was held by Ardsley Partners, which reported holding $14.7 million worth of stock at the end of September. It was followed by Millennium Management with a $0.3 million position.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified MBII as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Marrone Bio Innovations Inc (NASDAQ:MBII) but similarly valued. These stocks are First United Corp (NASDAQ:FUNC), Avadel Pharmaceuticals plc (NASDAQ:AVDL), Provident Financial Holdings, Inc. (NASDAQ:PROV), and Xunlei Ltd (NASDAQ:XNET). This group of stocks’ market values match MBII’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FUNC | 6 | 16016 | 0 |
| AVDL | 7 | 30296 | 2 |
| PROV | 1 | 9382 | 0 |
| XNET | 2 | 425 | -3 |
| Average | 4 | 14030 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $15 million in MBII’s case. Avadel Pharmaceuticals plc (NASDAQ:AVDL) is the most popular stock in this table. On the other hand Provident Financial Holdings, Inc. (NASDAQ:PROV) is the least popular one with only 1 bullish hedge fund positions. Marrone Bio Innovations Inc (NASDAQ:MBII) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately MBII wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); MBII investors were disappointed as the stock returned -25.5% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
