“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards ObsEva SA (NASDAQ:OBSV).
Is ObsEva SA (NASDAQ:OBSV) the right pick for your portfolio? Investors who are in the know are becoming hopeful. The number of bullish hedge fund bets advanced by 1 in recent months. Our calculations also showed that obsv isn’t among the 30 most popular stocks among hedge funds. OBSV was in 13 hedge funds’ portfolios at the end of the third quarter of 2018. There were 12 hedge funds in our database with OBSV holdings at the end of the previous quarter.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the latest hedge fund action surrounding ObsEva SA (NASDAQ:OBSV).
Hedge fund activity in ObsEva SA (NASDAQ:OBSV)
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OBSV over the last 13 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, OrbiMed Advisors was the largest shareholder of ObsEva SA (NASDAQ:OBSV), with a stake worth $47 million reported as of the end of September. Trailing OrbiMed Advisors was Rock Springs Capital Management, which amassed a stake valued at $20.2 million. Sectoral Asset Management, Ghost Tree Capital, and Point72 Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, established the largest position in ObsEva SA (NASDAQ:OBSV). Polar Capital had $2.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.7 million position during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ObsEva SA (NASDAQ:OBSV) but similarly valued. These stocks are Invesco Senior Income Trust (NYSE:VVR), Sohu.com Limited (NASDAQ:SOHU), Valhi, Inc. (NYSE:VHI), and nLIGHT, Inc. (NASDAQ:LASR). All of these stocks’ market caps are similar to OBSV’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VVR | 7 | 25926 | 2 |
| SOHU | 11 | 130228 | -2 |
| VHI | 10 | 6578 | 3 |
| LASR | 5 | 21697 | 0 |
| Average | 8.25 | 46107 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $101 million in OBSV’s case. Sohu.com Limited (NASDAQ:SOHU) is the most popular stock in this table. On the other hand nLIGHT, Inc. (NASDAQ:LASR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks ObsEva SA (NASDAQ:OBSV) 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. This article was originally published at Insider Monkey.