Hedge Funds Are Betting On BioTime, Inc. (BTX)

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like BioTime, Inc. (NYSEMKT:BTX).

BioTime, Inc. (NYSEMKT:BTX) was in 7 hedge funds’ portfolios at the end of September. BTX investors should be aware of an increase in hedge fund sentiment recently. There were 6 hedge funds in our database with BTX holdings at the end of the previous quarter. 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 Teligent Inc (NASDAQ:TLGT), Gold Resource Corporation (NYSEAMEX:GORO), and Neuroderm Ltd (NASDAQ:NDRM) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Keeping this in mind, we’re going to take a look at the new action encompassing BioTime, Inc. (NYSEMKT:BTX).

What does the smart money think about BioTime, Inc. (NYSEMKT:BTX)?

Heading into the fourth quarter of 2016, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 17% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in BTX over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Broadwood Capital, led by Neal C. Bradsher, holds the biggest position in BioTime, Inc. (NYSEMKT:BTX). According to regulatory filings, the fund has a $97.1 million position in the stock, comprising 16.6% of its 13F portfolio. Sitting at the No. 2 spot is Manatuck Hill Partners, led by Mark Broach, holding a $3.4 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Bart Baum’s Ionic Capital Management, D E Shaw, one of the biggest hedge funds in the world, and Warren Lammert’s Granite Point Capital. 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-microcap stocks.

As aggregate interest increased, key hedge funds have jumped into BioTime, Inc. (NYSEMKT:BTX) headfirst. Granite Point Capital, led by Warren Lammert, assembled the most valuable position in BioTime, Inc. (NYSEAMEX:BTX). According to its latest 13F filing, the fund had $0.3 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $47,000 investment in the stock during the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as BioTime, Inc. (NYSEMKT:BTX) but similarly valued. These stocks are Teligent Inc (NASDAQ:TLGT), Gold Resource Corporation (NYSEAMEX:GORO), Neuroderm Ltd (NASDAQ:NDRM), and Resolute Energy Corp (NYSE:REN). This group of stocks’ market caps are similar to BTX’s market cap.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $102 million in BTX’s case. Neuroderm Ltd (NASDAQ:NDRM) is the most popular stock in this table. On the other hand Gold Resource Corporation (NYSEAMEX:GORO) is the least popular one with only 6 bullish hedge fund positions. BioTime, Inc. (NYSEMKT:BTX) 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. In this regard NDRM might be a better candidate to consider taking a long position in.

Disclosure: None