In this article we will take a look at whether hedge funds think Aravive, Inc. (NASDAQ:ARAV) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Aravive, Inc. (NASDAQ:ARAV) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ARAV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Twin Disc, Incorporated (NASDAQ:TWIN), Partners Bancorp (NASDAQ:PTRS), and MMA Capital Holdings Inc. (NASDAQ:MMAC) to gather more data points.
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David Siegel of Two Sigma Advisors
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 we’re going to take a glance at the key hedge fund action surrounding Aravive, Inc. (NASDAQ:ARAV).
Do Hedge Funds Think ARAV Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2020. By comparison, 6 hedge funds held shares or bullish call options in ARAV a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Two Sigma Advisors was the largest shareholder of Aravive, Inc. (NASDAQ:ARAV), with a stake worth $1.7 million reported as of the end of March. Trailing Two Sigma Advisors was Renaissance Technologies, which amassed a stake valued at $1.4 million. Millennium Management, Citadel Investment Group, and Engineers Gate Manager 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 Two Sigma Advisors allocated the biggest weight to Aravive, Inc. (NASDAQ:ARAV), around 0.0048% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, designating 0.0046 percent of its 13F equity portfolio to ARAV.
Judging by the fact that Aravive, Inc. (NASDAQ:ARAV) has faced declining sentiment from the smart money, we can see that there lies a certain “tier” of money managers who sold off their entire stakes heading into Q2. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest stake of all the hedgies tracked by Insider Monkey, valued at close to $0.1 million in stock. Charles Davidson and Joseph Jacobs’s fund, Wexford Capital, also dropped its stock, about $0 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Aravive, Inc. (NASDAQ:ARAV). These stocks are Twin Disc, Incorporated (NASDAQ:TWIN), Partners Bancorp (NASDAQ:PTRS), MMA Capital Holdings Inc. (NASDAQ:MMAC), Code Chain New Continent Limited (NASDAQ:CCNC), Aileron Therapeutics, Inc. (NASDAQ:ALRN), Exela Technologies, Inc. (NASDAQ:XELA), and Boxlight Corporation (NASDAQ:BOXL). This group of stocks’ market values are closest to ARAV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWIN | 5 | 25838 | 0 |
| PTRS | 2 | 993 | 1 |
| MMAC | 4 | 8482 | -1 |
| CCNC | 3 | 657 | 3 |
| ALRN | 6 | 13846 | 5 |
| XELA | 8 | 10142 | 4 |
| BOXL | 3 | 664 | -1 |
| Average | 4.4 | 8660 | 1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $4 million in ARAV’s case. Exela Technologies, Inc. (NASDAQ:XELA) is the most popular stock in this table. On the other hand Partners Bancorp (NASDAQ:PTRS) is the least popular one with only 2 bullish hedge fund positions. Aravive, Inc. (NASDAQ:ARAV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ARAV is 58.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately ARAV wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ARAV were disappointed as the stock returned -15.8% since the end of March (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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
