The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Affimed NV (NASDAQ:AFMD) from the perspective of those successful funds.
Affimed NV (NASDAQ:AFMD) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of September, same as at the end of June. At the end of this article we will also compare AFMD to other stocks including CIBER, Inc. (NYSE:CBR), ADMA Biologics Inc (NASDAQ:ADMA), and Harvard Bioscience, Inc. (NASDAQ:HBIO) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How are hedge funds trading Affimed NV (NASDAQ:AFMD)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter of 2016. The graph below displays the number of hedge funds with bullish positions in AFMD over the last 5 quarters, which peaked at the end of last year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Samuel Isaly’s OrbiMed Advisors has the number one position in Affimed NV (NASDAQ:AFMD), worth close to $9.4 million. The second largest stake is held by Brookside Capital, which has a $5.8 million position. Other professional money managers that are bullish include Joseph Edelman’s Perceptive Advisors, James A. Silverman’s Opaleye Management, and Julian Baker and Felix Baker’s Baker Bros. Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: LMR Partners. 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was D E Shaw).
Let’s also examine hedge fund activity in other stocks similar to Affimed NV (NASDAQ:AFMD). These stocks are CIBER, Inc. (NYSE:CBR), ADMA Biologics Inc (NASDAQ:ADMA), Harvard Bioscience, Inc. (NASDAQ:HBIO), and Xcel Brands Inc (NASDAQ:XELB). All of these stocks’ market caps are closest to AFMD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CBR | 7 | 5983 | -3 |
| ADMA | 6 | 50046 | -2 |
| HBIO | 6 | 6440 | -1 |
| XELB | 3 | 9602 | -1 |
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $20 million in AFMD’s case. CIBER, Inc. (NYSE:CBR) is the most popular stock in this table. On the other hand Xcel Brands Inc (NASDAQ:XELB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Affimed NV (NASDAQ:AFMD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
