After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Aileron Therapeutics, Inc. (NASDAQ:ALRN).
Aileron Therapeutics, Inc. (NASDAQ:ALRN) has seen an increase in hedge fund interest recently. Aileron Therapeutics, Inc. (NASDAQ:ALRN) was in 6 hedge funds’ portfolios at the end of March. The all time high for this statistic is 9. There were 1 hedge funds in our database with ALRN holdings at the end of December. Our calculations also showed that ALRN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Frank Brosens of Taconic Capital
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. Now we’re going to view the fresh hedge fund action regarding Aileron Therapeutics, Inc. (NASDAQ:ALRN).
Do Hedge Funds Think ALRN 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 long this stock, a change of 500% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ALRN over the last 23 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Biotechnology Value Fund / BVF Inc held the most valuable stake in Aileron Therapeutics, Inc. (NASDAQ:ALRN), which was worth $7.5 million at the end of the fourth quarter. On the second spot was Ikarian Capital which amassed $4 million worth of shares. Renaissance Technologies, Two Sigma Advisors, and Taconic Capital 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 Biotechnology Value Fund / BVF Inc allocated the biggest weight to Aileron Therapeutics, Inc. (NASDAQ:ALRN), around 0.28% of its 13F portfolio. Ikarian Capital is also relatively very bullish on the stock, dishing out 0.14 percent of its 13F equity portfolio to ALRN.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Aileron Therapeutics, Inc. (NASDAQ:ALRN) headfirst. Biotechnology Value Fund / BVF Inc, managed by Mark Lampert, established the biggest position in Aileron Therapeutics, Inc. (NASDAQ:ALRN). Biotechnology Value Fund / BVF Inc had $7.5 million invested in the company at the end of the quarter. Neil Shahrestani’s Ikarian Capital also made a $4 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Frank Brosens’s Taconic Capital, and Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to Aileron Therapeutics, Inc. (NASDAQ:ALRN). We will take a look at Exela Technologies, Inc. (NASDAQ:XELA), Boxlight Corporation (NASDAQ:BOXL), SELLAS Life Sciences Group, Inc. (NASDAQ:SLS), Phoenix New Media Ltd (NYSE:FENG), VAALCO Energy, Inc. (NYSE:EGY), PC Tel Inc (NASDAQ:PCTI), and Cidara Therapeutics Inc (NASDAQ:CDTX). All of these stocks’ market caps are closest to ALRN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XELA | 8 | 10142 | 4 |
| BOXL | 3 | 664 | -1 |
| SLS | 4 | 953 | 3 |
| FENG | 5 | 2684 | 0 |
| EGY | 6 | 11733 | -1 |
| PCTI | 10 | 27772 | 0 |
| CDTX | 6 | 13667 | 0 |
| Average | 6 | 9659 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $14 million in ALRN’s case. PC Tel Inc (NASDAQ:PCTI) is the most popular stock in this table. On the other hand Boxlight Corporation (NASDAQ:BOXL) is the least popular one with only 3 bullish hedge fund positions. Aileron Therapeutics, Inc. (NASDAQ:ALRN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ALRN is 51.4. 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 negative signal and 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 surpassed the market again by 4.8 percentage points. Unfortunately ALRN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ALRN investors were disappointed as the stock returned -2.1% 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 most of these stocks already outperformed the market in 2021.
Follow Aileron Therapeutics Inc. (NASDAQ:ALRN)
Follow Aileron Therapeutics Inc. (NASDAQ:ALRN)
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Disclosure: None. This article was originally published at Insider Monkey.
